A long-term alternative formula for a stochastic stock price model

Abstract

Article Highlights We call into question the validity of expected value concept applied to heavy-tailed distributions of stock prices We propose an alternative formula for evaluating future prices based on median The proposed idea is in line with biological bet-hedging and the Kelly criterion in optimal betting

Keywords

• Stock market
• Random walk
• Geometric Brownian motion
• Geometric mean fitness
• Multiplicative growth