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Do you know about the Monty Hall Problem?
If you deal with data, statistics and probabilities...it's worth taking a few minutes to understand the Monty Hall Problem and how restricted choice can create bias in your results.
This bias was so strong and at the same time so subtle that famous behavioral scientists have fallen prey to it. Perhaps one of the greatest examples is the Hot Hand Fallacy.
We took the data set from the SP500 Yahoo Finance Historical Data and tested it.
We only had open and close data from 1982 and after.
Methodology: Rather than measuring calender years, we measured trading years on a daily basis. Every day of every year we looked back 1 trading year and measured the results.
Over 9930 Periods, 7727 of periods the SP500 was higher than the same day in the previous trading year. It was never the exact same. 1950 it was lower.
Mean returns were 10.6%
Median returns were 11.96%
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