Stock prices are not random from "summary" of Why Stock Markets Crash by Didier Sornette
Stock prices are not random. This simple statement has profound implications for our understanding of financial markets. The random walk hypothesis, which suggests that stock prices follow a random pattern, has been a dominant paradigm in economics for many years. However, evidence from empirical studies suggests otherwise. In reality, stock prices exhibit patterns and trends that can be predicted to some extent. These patterns can be observed in the form of bubbles and crashes that occur in financial markets. These events cannot be explained by the random walk hypothesis alone. Instead, they suggest that stock prices are driven by a complex interplay of factors, including investor behavior, market sentiment, and external events. One key factor that i...
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