many of the screens on MI have been back tested for decades, then tested for years post discovery so the likelihood of the results being random noise is very small.
The best screens seem to vary from year to year with no pattern .At least no pattern I have been able to find. So investing in one is hit or miss if your attention span is only a few years. It requires iron discipline , something most of us do not have…
When Saul saw his stock picks fall 60+%, it must have been hard not to sell. And since they were US stocks they recovered. If he had been Japanese investing in Japanese stocks in 2000, 15 years later he might still be losing money .
And it’s possible some things might “be different” this time- for instance globalization might adversely effected screens relying on differences between US and EU stocks.
Watching a few dice throws, by luck picking most of them right ,will not give the valuable information that backtesting of a few hundred throws will give you.
Back Testing is the only even semi reliable way to determine the probabilities of any system. But you can’t back test a system that has variable rules, that depends on changing human judgement, so you can’t back test the totality of what Saul does. Or what most investors do. You can only back test parts of it.
Check out SI Pro at the AAII site- there are a huge number of parameters listed. Digitalization of required SEC filings gives us a database that would have cost several million dollars only a few years ago. I can’t over stress that these mechanical systems do not always work, but they do increase the odds of success in some measurable way, and risk can be calculated right along with return.
I am a neophyte on MI ,and mostly used insights there to pick general market timing tools, transforming them from spread sheet based to chart based. Lots of work but mostly nothing very original.
One of my systems is " disruptive innovation investing", investing in companies involved in things like robotic surgery, electric cars, electron beam 3DP etc. Payoff can be huge but it takes years to know. This can not be automated or backtested because there are no numbers early on that tell you what is true disruption. Or who will wind up as the successful disrupters.
In the case of two I have now, TSLA and AMAVF, they are way ahead of everybody else. But could still fail. Payoff may be years away. but I think I will have the guts to hold these during a bear market . I believe in the story, the narrative, and that is not something you can put numbers on.
And for me an important part of this is that learning about these companies and their industries is more fun than it is work.
The older I get , the more quality time outranks money as a goal.