Walruses perform oral sex on themselves, their penis is long enough and they are flexible enough to do the deed.
— UberFacts (@UberFacts) January 29, 2015
Reading the tweet above this morning, reminded me of a bold comment that was made last night from a fellow reader, named the Frog.
Last night’s post made a case for $FB returning an average gain of 4.57%, for holding it 5 days, when an oversold signal was reached. This stat has an 86% of being correct based upon 12 months of price action.
The Frog doubted this and offered to perform oral sex on himself, similar to that of a Walruse, if $FB would return a gain of 4% in 5 days. See for yourself HERE.
I only reference this for long time readers of this site who remember a young lad named Cap. If you need some help reviewing the story, check the comments for CAP: CLICK HERE
Well, FB is off to a good start this morning, up nearly a percent today alone. I’m rooting for FB here, let’s see where she closes in 5 days.
Moral of the story: Hubris is a bitch, especially in Financial markets. Frog, you have a 14% chance of backing out of the deed.
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100% agree with the moral, good stuff RC.
I guess should be said, sample sizes of 8-12 occurrences with unknown population parameters have *zero* statistical validity. You cannot do any of the stats for significance — this means statistically there is none. (Which doesn’t mean not useful, see below).
The other thing that skews those stats is that they only occur during a bull market, where in general, dips are bought.
That said — it’s still a great resource for finding ideas. For the most part, buying stocks in a dip flagged by the PPT would make sense and is a sweet way to find these opportunities. And like everything, risk reward matters more. But the pure ‘semantics’ of saying the actual value of XYZ% return over N days is incorrectly applied.