False Hope: Most Trading Strategies Are Not Tested Rigorously Enough

Ted

FYI: Let me tell you about the perfect investment offer. Each week you will receive a share recommendation from a fund manager, telling you whether the stock’s price will rise or fall over the next week. After ten weeks, if all the recommendations are proved right, then you should be more than willing to hand over your money for investment. After all, there will be just a one-in-a-thousand chance that the result is down to luck.
Regards,
Ted
http://www.economist.com/node/21644202/print

Tampabay

I hate recommendations (predictions) from managers, all I want to know is: How he is going to make (me) money tomorrow and in the future, what he buys is his problem(job).....which we will all be watching very carefully
Leave the predictions to religion(s), they will tell you what is going to happen (to you)

LLJB

Thanks @Ted, that's one of the best articles I've read in a long time about why one needs to be careful with trading systems.

Old_Joe

From the article:
"Financial research is highly prone to statistical distortion. Academics have the choice of many thousands of stocks, bonds and currencies being traded across dozens of countries, complete with decades’ worth of daily price data. They can backtest thousands of correlations to find a few that appear to offer profitable strategies."