Are stock prices really random?

There are several aspects that make the market not entirely random.

Especially if we look not at a single company or country, but at indices that replicate the performance of entire markets.

These have statistical regularities that can really be exploited by investors, mainly in the long term, but also in the short term.

In the long term, in fact, we know that the S&P500, a good approximation of the entire stock market, grows by 8 to 10% every year, on average.

This means that you can be fairly sure that your portfolio will double in value every 7 years or so.

The most common bear markets almost never last more than two years. The longer the time in the market, the lower the probability of loss.

Since its inception, the S&P500 has never been down for more than 13 years, and that was under extreme conditions such as world wars. And only if you had simply invested everything at the highest point in one go, because a diversified investment over time, such as a PAC, would have taken much less time to recover.

Over the short term, markets are much more volatile and difficult to tame, influenced by monetary policies and circumstantial sociopolitical contingencies. Some regularities are still discernible nonetheless.