A Non‐Random Walk Down Wall Street.

Abstract

This volume collects together eleven papers of these authors, together with a general introduction. They are arranged into three broad areas with a further short introduction to each of these three parts. The overall introduction to the volume reviews the core ideas which motivate most of the collected papers: the Random Walk and the Efficient Markets hypothesises. In particular it is emphasised that 100% efficiency, with zero profit opportunities, is unrealistic just as in any other physical system. One can hope for increasing relative efficiency over time and as part of this it is inevitable, and healthy, that profits may accrue to financial innovation in the same way they reward R & D in other areas of economic life. For example, financial forecasting might be expected to improve in the same way as weather forecasting has improved, with the first to use new techniques making abnormal profits. This possibility of relative efficiency increasing also has the implication that applying current best practise to historic data may uncover profit opportunities in the same way one might be able to improve on historic weather forecasts using today's technology. The introduction is concluded with some examples of how efficiency might be increased in the future.

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