Professional
investors use back
data to sell strategy
based on future
events.
Wall Street financial models often resort to what is known
as data mining. Information on
various investing strategies of the past.
They are collected
and tested on a “what if’ basis
for the future.
This is
also called back-testing;
the strategies of the past are used to see what would happen,
hypothetically, when projected into the future.
All
this is based on many assumptions that the mathematical models are
supposed to predict.
After
my decades-long investigations of investment strategies, I can tell you this: There are some worthwhile concepts as well
as gibberish in all. But no panacea exists. I would say that most of
the data mining is therefore useless, except for their marketing of
investment management services. (
See the Earl J. Weinreb NewsHole® comments.)
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