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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Stock Farmer who wrote (54573)11/2/2003 7:32:28 PM
From: Mathemagician  Read Replies (1) of 54805
 
I wouldn't say that the Gorilla game hasn't been back-tested so much as that it's design was flawed from the same fallacy that allows us to draw perfect trendlines in retrospect.

I disagree. Well, sort of. It is a fact that one can generate above average returns using trendlines, as long as one uses them with discipline and a rigid algorithm.

However, unless the process of drawing a trendline is rigidly defined so that it uses only data available at the time the investment decision is to be made then a trendline method cannot be backtested accurately. Even still, it might work in real time. There is no way to know. The point is, backtesting a discretionary strategy yields no meaningful results. The GG is a discretionary strategy. Doesn't mean it will work or not. Just means it can't be properly backtested. As it was implemented here, LTBH, there are not yet enough results to determine whether the method is effective or not.

It is not as much a fallacy as it is an issue of confusing a priori probability vs a posteriori probability.

Reversal days are a good example of this. It is true that most reversals happen at reversal days. However, it is not true that most reversal days lead to reversals. The implication in trading is that that reversal days generally make a better filter or confirmation criteria than primary entry strategy.

Perhaps that analogy can be extended to the Gorilla Game?

Back then, according to the elite few, "Market Timing" suggestions for improving the Gorilla Game as an investment strategy had no place in what was a LTB&H oriented forum

Like it or not, they had a point. Whether the ideas are right or wrong, market timing discussions are not appropriate in an LTBH forum. Discussions of market timing are more appropriately held in market timing forums. You should not have been surprised to receive such a negative reception.

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