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American Air’s Mishap and Statistical Misuse
Last week’s American Airlines’ Boeing 757 incident helps illustrate a common investment problem: the misuse of statistics. Every day we are inundated by numbers that seemingly prove something. Yet, many are improperly calculated, selected, analyzed and presented. Our defense is to… »
The DJIA Closes At 5,813 – In 1989 Dollars, That Is
We see many articles and studies that use long-term results to make a point – especially now because the stock market is selling at levels first seen some years ago. For example, the excitement of the Dow Jones Industrial Average (DJIA) re-crossing 10,000 and the “lost decade,” so-called because markets are at levels first... »
Statistical Shortcuts Can Bog Down Your Investment Returns
As a final piece on statistics, I want to cover some popular statistical shortcuts applied to investing. Whether done innocently or intentionally, the results are the same – unusable. If action is taken based on them, the result can be both unexpected and undesirable. »
Beware of Sound-Bite Logic – It’s Compelling but Misleading
“Question everything!” Excellent advice, especially for claims based on simplified statistics. What is amazing – read, disconcerting – is how pervasive improper statistical analysis is. So, we need to ensure pronouncements and conclusions we deem important are accurate. Here is a non-investment example… »
Statistics Can Be Fun – And Profitable
Statistics fun? Well, yes, if they are profitable – and they can be. In investing it isn’t just wise statistical analysis that can make money – it is also the spotting of misapplied statistics by others. The frequency with which this happens is high enough to make it an important strategy for contrarian investing.... »
John Tobey on Seeking Alpha
