The Random Walk Hypothesis, Portfolio Analysis and the Buy-and-Hold Criterion**

Abstract

Recent literature has witnessed the emergence of an impressive body of empirical evidence relating to the relationship which exists between successive security price changes. The great majority of this evidence has tended to support what has come to be known as the theory of random walks in security prices—that is, the theory that successive security price changes behave as independent random variables, which implies that knowledge of “the past history of a series of price changes cannot be used to predict future changes in any ‘meaningful’ way.”