The Motley Fool Discussion Boards
Investing/Strategies / Retirement Investing
|Subject: Re: RFO (Request for Opinions)||Date: 11/28/2004 2:37 PM|
|Author: rkmacdonald||Number: 43326 of 79817|
Bernstien and Malkiel have written books based on a very faulty perception of the market, and bad mathematics.
This is NOT true.
Stocks do not vary according to a random walk, nor do they behave according to a normal distribution.
This IS true. However the difference is very very minimal, and simply not big enough to base any type of successful trading strategy.
For some sound mathematics, see Mandelbrot's "The (Mis)Behavior of the Markets". Unfortunately, this book will not tell you how to trade, but it does completely debunk the other stuff.
As a former electrical engineer focusing on communications theory, I have read many of Mandelbrot's works on fractal geometry. Nothing in his book about the market should surprise anyone who has been around the market for an extended period of time. Nothing he says 'debunks' any of the investing principles put forth by Bernstein or Malkiel.
The fact is that the disturbances to traditional statistical methods that Mendelbrot has described, are so minimal that th