In highly uncertain scenarios, studying past success isn’t a reliable way to predict future success.

Stock prices are generally unpredictable. So you might be inclined to comb through historic data to identify trends.

Say you look at data from the past 10 years. If you look at enough possible scenarios, I’m sure some crazy trend would emerge. Probably something ridiculous like high returns from investing in small-cap tech stocks on the third Tuesday of each month.

There’s probably nothing magical about the third Tuesday of each month.

So why did this trend emerge? Because there’s some secret justification beyond our understanding?

No.

Say there’s a one-in-a-million chance that this trend actually has an effect on stock prices.

If you look at a million different crazy scenarios like this, odds are one will prove true just by dumb luck.

-Brandon