Final answer:
The Random Walk Theory posits that stock prices exhibit unpredictable day-to-day movements but follow a long-term upward trend, making it difficult to predict specific stock winners due to ever-changing market information.
Step-by-step explanation:
The theory that suggests there are repetitive, predictable sequences of numbers and cycles found in nature, and similar predictable patterns in the movement of stock prices is known as the Random Walk Theory. This theory indicates that while it may seem that stock prices have a random, unpredictable movement on a day-to-day basis, there is an overarching trend that can be observed over a longer period. This trend typically shows an upward trajectory despite the short-term fluctuations that appear random and are influenced by unpredictable news and events that affect market expectations and stock valuations.
Why It Is Hard to Get Rich Quick: According to the Random Walk Theory, the challenge in predicting future stock winners lies in the fact that unexpected news can change market expectations and affect profits, thus altering stock prices. Attempting to identify potential high-profit companies is complicated by the fact that many investors may have already anticipated these outcomes, and as such, these expectations are priced into the stock. Therefore, while cycles might appear in stock movements, they are challenging to predict with accuracy due to the ever-changing information landscape impacting stocks.