Random OR Non-random Walk?

There are times when the market switches from random to non-random behavior and that is when "fat tails" in all time frames exert their collective influence. Dependence both short- and long-term also exert a non-random effect.

Sound familiar-- Mandelbrot.


This has been "proven."

But now take this and apply it in a useful fashion and you're set.

 

Nadaq 5000 to Nasdaq 2000 in a very short time. All with negative earnings. How can that have been an efficient market.

 

Cool stuff

1. http://en.wikipedia.org/wiki/Benoit_Mandelbrot
2. http://www.math.yale.edu/mandelbrot/
3. Video stream of Mandelbrot lecturing at MIT: http://mitworld.mit.edu/play/52/
4. A Fractal Analysis of Foreign Exchange Markets: http://www.highbeam.com/library/doc0.asp?DOCID=1G1:59876179&refid=holomed_1

 

I recall reading Fama's comment on the Great Depression and Asian Financial crisis as a corrections in the market and further maintained that it's a normal in an efficient market to have corrections. Thus, I would presume that the would refer to the recent Nasdaq crash as yet another correction?

PS: I've yet to fully grasp his concept of such correction viz a viz EMT.

 

The molecule that is being propelled in a straight line by Brownian motion probably believes it's hot shit.

 

Postulating is nothing but scientific and it's a long time that even academics now recognize that efficiency has nothing to do with random walk.

But yet Market tends to be efficient because it's just the aim of the market: rip off the profits mostly for manipulators and insiders, only the mass of naïve can think efficiency comes from a "free" market. The market is not free it is controlled but a special control which create artificial chaos.

 

didn't talk about your AMH
if you would know a bit more about system theory, you might understand why I picked some date about 1945 for "academics" losing their pants randomly or not in the market ever since.

 

Looks like: Winners would call it Non-random while others Random.

 

Exactly! and of course you can make money if its Random, you don't need to to predict.

And yes its basically efficient because of insiders taking out the bulk.

Although I still think most of the time Insiders also lose their shirts.

 

Certainly you can (if you're smart enough and your "market" is "polite" enough). In my language, you would be "predicting" though. "Predicting" being an old-fashionable-ET-riddle, don't expect nononsense to change anything.