We’re all backtesters in some degree, but not all backtested strategies are created equal. One of the more common (and dangerous) mistakes is 1) backtesting a strategy based on the historical record; 2) documenting an encouraging performance record; and 3) assuming that you’re done. Rigorous testing, however, requires more. Why? Because relying on one sample—even if it’s a real-world record—doesn’t usually pass the smell test. What’s the problem? Your upbeat test results could be a random outcome.
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● Greece is on the brink… again still, but this time it’s far more acute as the government closes banks and imposes capital controls, pushing the beleaguered nation closer to default and a hasty exit from the euro…
● Meanwhile, back in the US, the University of Michigan’s Consumer Sentiment Index increased to its highest reading since January in this month’s preliminary reading. “An improving economy was the most important component,” said the chief economist for the survey…
● Eurozone economic confidence in June retreated, according to the European Commission’s revised survey data…
● And China cut interest rates to a record low after a sharp decline in the stock market.