Random Walk Law and Legal Definition

Random walk is an economic theory which assumes that market price movements move randomly and new information comes to the market randomly. The theory implies that market prices move randomly as new information is incorporated into market prices.

The following is an example of a case law on random walk:

New information can result in a change in the intrinsic value of a stock and subsequent stock price movements will follow what is known as a random walk. [In re LTV Sec. Litigation, 88 F.R.D. 134, 144 (N.D. Tex. 1980)].