What we have at hand is the market historical price dataset. We draw conclusions out of it. We develop strategies out of it.
But is this a real dataset? Does it have consistent inherent properties we can rely on?
We can consider a price movement as any of two: 1) risk premium realization or 2) risk realization. But the truth is, in every moment of history, we have a different combination of risks available.
Most risks we have now probably were never realized in history. Whatever was realized in history, may have little or no relation to what we have now.
That makes the whole historical dataset more or less useless. That makes those conclusions and strategies more or less dangerous.
But is this a real dataset? Does it have consistent inherent properties we can rely on?
We can consider a price movement as any of two: 1) risk premium realization or 2) risk realization. But the truth is, in every moment of history, we have a different combination of risks available.
Most risks we have now probably were never realized in history. Whatever was realized in history, may have little or no relation to what we have now.
That makes the whole historical dataset more or less useless. That makes those conclusions and strategies more or less dangerous.
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