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TORTURING DATA

If you torture the data long enough, it will confess.

—RONALD COASE

What’s so hard about predicting stock prices? Anyone with open eyes can see patterns in stock prices—patterns that are a self-evident foretelling of whether prices are headed up or down.

Thirty years ago, a former student named Jeff called me with exciting news—my lectures on the futility of trying to discern profitable patterns in stock prices were hogwash. Jeff had taken a job with IBM and, in his spare time (ha, ha!), was studying stock prices and had found some clear patterns. He was fine-tuning his system and would soon be rich. He told me that he was going ...

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