What NASCAR Can Teach Us About Return Persistence
| Apr 28th, 2010 | Filed under: Academic Research, CAIA Alternative Viewpoints Columns, CAPM / Alpha Theory, Guest Posts, Today's Post | By: Guest |
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By: Miran Ahmad, CAIA, AllAboutAlpha.com Editorial Board
The search for alpha would not be complete without the search for managers who consistently beat their peers year after year, despite the ubiquitous disclosures that “past performance does not guarantee future results.” The groundbreaking and wildly popular AllAboutAlpha.com post “What US college basketball can teach us about survivorship bias” taught us two important lessons: first, Duke actually stopped choking long enough to win a tournament; and secondly, that “hidden survivorship bias” might be a better metric when looking at hedge fund database returns (Editor’s Note: The occasionally misguided sporting opinions of the author are not necessarily shared by AllAboutAlpha.com…). So if basketball can teach us about survivorship bias, what can NASCAR and Formula One racing teach us about return persistence? More…
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