How do you win this complex, infinite, random game?
"There are known knowns, things we know that we know; and there are known unknowns, things that we know we don't know. But there are also unknown unknowns, things we do not know we don't know."
– Donald Rumsfeld
Share prices may reflect fundamentals over time, but the journey is likely to be a random walk. The random walk theory was popularized by Burton Malkiel in A Random Walk Down Wall Street. It essentially postulates that every financial asset has an intrinsic value, yet market prices are hard to accurately predict. Randomness routinely throws market participants off. When even the best of the best in the business succeed roughly 50% of the time, the only conclusion is that randomness cannot be eradicated.
There are two types of games: finite and infinite. A finite game has a clear set of rules, participants, a beginning, a middle, and an end. An infinite game has no set...
