Backtesting: What Is It Good For? [Part Two]

Rupert Hargreaves

Published onFebruary 20, 2015

Updated on May 13, 2021

In part one, I looked at backtests and how, if not conducted properly, the data produced from these tests can be highly misleading.

Table of Contents

However, as I noted in part one backtests should not be written off entirely. They have their uses, if used properly. This was a topic Jim O'Shaughnessy, Chairman and CEO of O'Shaughnessy Asset Management and author of What Works on Wall Street covered last year on his Yahoo! Finance blog.

Backtesting Using Shiller PE 6 — Backtests Using Shiller PE

Five issues with backtesting

The five main issues with backtesting, as covered in part one are 1) data-mining; 2) a limited time period;...

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Rupert Hargreaves

Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for Hedge Fund Alpha

Backtesting: What Is It Good For? [Part Two]

Five issues with backtesting

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