Stock Exchange: How to Use Backtests Effectively

  Everyone interested in managing their own money ought to keep an old idiom in mind: if it seems too good to be true, it probably is. Unfortunately, greed is a powerful motivator. It’s tempting to see a new model with an incredible backtest and think this could be the answer. Experienced investors know that […]

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Stock Valuation and Occam’s Razor

Among competing hypotheses, the one with the fewest assumptions should be selected. William of Occam   The use of this principle is valuable, but not completely determinative in science.  It often has an important application in investing. Let us consider two hypotheses. A method of valuing markets that relies upon backward-looking data, looks at replacement […]

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