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Home / The Listener / Business

David Kirk: On walks, podcasts and the perplexities of the share market

By David Kirk
New Zealand Listener·
8 Jul, 2025 08:35 PM5 mins to read

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David Kirk: "Many financiers do not believe in the random walk of share markets, but they have a hard job proving they are right."

David Kirk: "Many financiers do not believe in the random walk of share markets, but they have a hard job proving they are right."

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Former All Black captain David Kirk, now chair of Rugby New Zealand, joins Listener.co.nz taking a conversational look at money, finances and investing. The co-founder and chairman of Bailador Technology Investments, Kirk sits on a number of other boards including investee companies of Bailador and charitable organisations.

It was seven o’clock in the morning and I was still a bit groggy from the anaesthetic when my surgeon showed me a worn and pitted brownish bone that he assured me was the head of my left femur. “Very tatty,” he said. At some point later he also advised me not to run on my swish new titanium hip, so I walk a lot.

Most people these days listen to podcasts when they are walking. I know I am right in saying most people because I have undertaken informal surveys, and what’s more, at least half the time when I am out for a walk and say hello to a stranger as we pass in opposite directions, they don’t reply because they have earbuds in place.

My surveys have found that people on walks listen to podcasts for a variety of reasons. Some want to catch up on the news or sports results. Others, perhaps the majority of the young people I have informally surveyed, are trying to learn something useful to them in their work from someone who makes money telling people how to improve themselves in work they don’t do because what they do is podcast.

Another large minority of walkers listen to social and political commentators who reassure them they are quite right to consider this or that politician or public figure a menace to right-minded progress, and this or that other politician the bee’s knees. On they march, the right bells ringing in their very own echo chamber.

I am an earbud-free aimless walker. I rarely go for a walk to have a think about something, but I do think about things on my walks. Recently I was thinking about the aimlessness of my walking, which led me to think about the difference between aimless walking and random walking. Aimless walking is just that. Going for a walk with no route in mind and nothing to do on the walk. No trip to the shops, no visit to a friend, no point to it at all. Aimless walking has a distinguished literary tradition, of course, and none more distinguished that WG Sebald’s Rings of Saturn[RB1], but the other path – random walking - is interesting too.

Random walking has a distinguished history but not in literature, rather in mathematics and financial markets. There is strong body of research and opinion that supports the view that individual shares, and the share market generally, both progress with a random walk.

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That is, changes in the price of individual shares and the share market index are random. The theory says there is no rhyme or reason that explains why shares go up one day and down the next and then up again and up again and then down and then up and then down and down and down and up and so it goes forever.

There have been some fun tests trying to prove this theory. One professor gave the members of his class a coin and a start value for a fictitious share price index and asked the class to toss the coin 100 times, then take off half a point from the share price index for every head and add half a point for every tail. A map of the results looks just like the 100-day movement of a share price index.

Another researcher had skilled experts pick a basket of stocks; and then he asked his office workers throw darts at a dart board to pick another basket of stocks. Watching how the two baskets performed, the experts won but not by much. Finally, if you take a random number stream like the decimal points of the irrational number pi and chart a point up for every even number and a point down for every odd number, your chart will look just like a chart of share prices over time.

It is an observable fact that share markets rise over the long term because of increasing corporate earnings, inflation and the like, but on any one day for any one stock the random walk theory is hard to beat.

Many financiers do not believe in the random walk of share markets, but they have a hard job proving they are right. I prefer not to believe in random walk, since I spend a lot of time trying to improve the value and share price of companies I am involved with. When there appears to be no reason for a share price to be stubbornly depressed, rather than entertain a mathematician’s fancy, I gather up what I can and take my chances.

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