Price Movements in Speculative Markets: Trends or Random Walks by SIDNEY S. ALEXANDER, Professor of Industrial management There is a remarkable contradiction between the con behavior of speculative prices held by professional stock market analysts on the one hand and by academic statisticians and econo mists on the other. The profes sional analysts operate in the belief that there exist certain trend generating facts, knowable today, that will guide a speculator to profit if only he can read them cor rectly. These facts are believed to generate trends rather than ins tantaneous jumps because most of those trading in speculative markets have imperfect knowledge of these facts, and the future trend of prices will result from a gradual spread of awareness of these facts throughout the market. Those who gain mastery of the critical information earlier than others will, accordingly, have an opportunity to profit from that early knowledge The two main schools of profes sional analysts, the fundamen talists"and the "technicians, ' agree on this basic assumption. They differ only in the methods used to gain knowledge before others in the market, The fundamentalist seeks this early knowledge from study of the external factors that lie behind the price changes. In a commodity market he tries to estimate the future balance of supp In the stock market he general business conditions and the profit prospects for various i dustries, and for the individual firms within those industries, with The 'technician''operates on the same basic assumption, that facts existing at one time will govern the pi time, but he operates in a different manner. He leaves to others the study of the fundamental facts in the reliance that as thos others act on their knowledge there will be a detectable effect on te of the stock The technician, accordingly, studies price movements of the immediate past for telltale indica he Both schools of analysts thus assume the existence of trends hich represent the gradual recognition by the market of emergent factual situations trends which, if they exist, must depend for 4 The data gathering and processing. underlying this research were sup Po2 ch Fund of the School of Industrial man etts Institute of technol 7