A new video has been produced by the Mathematicians Against Fraudulent Financial and Investment Advice (MAFFIA) group. It explains, in simple terms, how many of the financial strategies and funds available today are based on a statistically dubious foundation, typically rooted in selection bias effects, because the finance world, unlike other fields such as the pharmaceutical industry, has not yet been forced to adopt the necessary rigorous statistical methodology to prevent such problems.
As a result, we often see a “vicious cycle”:
Academic researchers publish a paper describing a new investment strategy, but fail to disclose the fact that they
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