Retail consumption in the final month of 2016 increased by 0.6%, led by higher spending on motor vehicles, the Census Bureau reports. Although the increase was slightly below expectations, the rise was enough to boost the year-over-year trend above the 4% mark for the second time last year.
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Ben Carlson at Ritholtz Asset Management reminds us that backtesting offers no shortcuts to investment nirvana. As he correctly points out, there are numerous shortcomings in the art/science of reconstructing the historical results of an investment strategy. But it’s also true that backtesting, if used wisely, can be a powerful tool for sensibly managing expectations with regards to return and risk. In fact, there’s really no reason not to run a backtest, even on strategies that appear to be free of mystery. The tough part is figuring out how, or if, to use the results. Fortunately, clear thinking and planning can boost the odds that backtesting will be a productive exercise.
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