Wall Street likes to tout returns it didn’t actually produce. You need to ask some important follow-up questions.
This week, the Dow Jones Industrial Average, born on May 26, 1896, turned 128 years old. Let’s pour the Dow a drink from the fountain of youth and see what happens.
I’ll give you a hint. The lesson here isn’t only about markets, but also about marketing—in particular, what’s called backtesting, a statistical dirty trick that’s central to Wall Street’s marketing playbook.
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This article was originally published on The Wall Street Journal.
Further reading
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money