Random Walk

According to empirical evidence, all attempts to model future movement of share price or exchange rate is futile. The model which gives the least error is surprisingly the random walk model. What is it? It tells you that all form of forecasting is useless, as all movement in share price or exchange rate is random. However, it does tell one thing. Past price movement is reflected in today's price. Today's price records all the events which happened in the past. If there wasn't a recession, the share price today could be a lot higher.

This caught my attention. Whatever happened in the past will shape how things are now. This is not an unfamiliar concept in me. Aristotle came out with the theory of causality which states that event B happens due to event A. Without event A, event B would not happen.

In fact, this is one of the central teaching in Buddhism. Sankhara conditions Sankhata, argued the Buddha. Sankhara is conditioning activity, while Sankhata is conditioned activity. Sankhata will in turn transform into sankhara, and this process will go on and on. For example you get good results. This is because you answered well for your exam. The process of you answering well is sankhara, and the good results is sankhata. You feel happy as a result of getting good results. The happy feeling is sankhata, and good results is now sankhara. See how a conditioned activity can become a conditioning activity.

I would not dwell on Buddhism now or this post could span into a thesis long essay. The reason I touch on this topic of causality is to reflect on something which happened not long ago. I did something unknowingly and things do get out of control. The effect of my wrongdoing may still be lingering now. I do hope that things would be normal soon if it isn't. Nothing much I can do, just hope time would do its magic. In the meantime, will just distract myself from missing too much by doing work.

P.S. Hope the barley does the trick..