Trend-following is not such a good model. It’s simply eroded. Things change and being able to adjust is what made Mr. Simons so successful. “Statistic predictor signals erode over the next several years； it can be five years or 10 years. You have to keep coming up with new things because the market is against us. If you don’t keep getting better， you’re going to do worse.
We search through historical data looking for anomalous patterns that we would not expect to occur at random. Our scheme is to analyze data and markets to test for statistical significance and consistency over time. Once we find one， we test it for statistical significance and consistency over time. After we determine its validity， weask， ‘Does this correspond to some aspect of behavior that seems reasonable？’
Luck， is largely responsible for my reputation for genius. I don’t walk into the office in the morning and say， ‘Am I smart today？’ I walk in and wonder， ‘Am I lucky today？’
Models can lower your risk…….. It reduces the daily aggravation. With old-fashioned stock picking: “One day you feel like a hero. The next day you feel like a goat. Either way， most of the time it’s just luck. “We don’t override the models.
