Professional investors often 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 and @BusinessNewshole at Twitter.)
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