Mirage of the Stock Market: Track Records for Investment Funds Can Be Misleading

In ironing out an investment strategy for managed accounts, a standard procedure is to examine the prior performance of the investment funds. Contrary to popular belief, however, a track record in the financial markets proves nothing of substance. As a case in point, a superior portfolio that outpaces the stock market can be constructed in a systematic fashion as explained in this article. The method adopted here may be viewed as an instance of proof by demonstration.

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