Ep. 1159: Three Outside the Box with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
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The Random Walk Hypothesis and the Stock Market
As a grad student, I was taught by a number of faculty that really the efficient market hypothesis was gospel truth. The thing that got me started down another path was the fact that I enjoy dealing with data and looking at numbers. We were shocked to learn that according to our test, the stock market did not follow random walks. It really took us probably a good 10 years of various kinds of additional tests, refinements and various kinds of counterfactuals that we had to go out.
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