Talk:Stock market prediction

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[edit] The random walk hypothesis

This section seems weaker than the rest of the article. There is the Markov hypothesis, which, applied to a given share price, states that the expected price on a future date is equal to today's price, which would be the case in a random walk. In this case the only independent variable is time, and an influence such as the base interest rate of the UK being changed by the bank of England plays no role, even if this has a quantifiable effect. The hypothesis does not say that the interest rate can't affect the share price, but that no change of the independent variable (time) or the price itself has a future effect.

If the share price and base rate are considered together, ie a function from time to pairs of numbers, again one may or may not apply the Markov hypothesis, but even if it is applied, it does not imply the interest rate does not affect the share price.

I suppose the Markov hypothesis could apply to this function if there are speculators who manage to buy and sell adequate shares the first instant the bank's decision is announced.