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Author: galtsgulch One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75772  
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/17/1998 2:01 PM
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<<So, you've still failed to show where there is any "danger" in this.>>

I would like to withdraw the word danger. This is obviously too strong a word for people who invest in blue chips. The statement that I wish to defend is: "It is unlikely for the DOGS to beat the market over the next 5 (or more) years."

<<Yes, winning 8 out of 10 coin flips proves nothing. But outperforming the market over 10, 20, 30, 40, 50, 60, and 70 year periods should tell you something. (This is where the common sense comes in.)>>

Fine, change my example to 80 out of 100 times, that's not the point. The point is that correlation is not proof.

Not to get on my philosophy of science soapbox… but this is exactly what has led so many people astray on environmental issues. The fact that there has been a temperature rise over the last so many years does not prove that the temperature rise is man made. Unfortunately, so many scientifically illiterate people have been duped into believing this claim, I have more or less given up hope. As long as they believe that correlation proves the case, regardless of establishing a causal relationship, they are impervious to reason.

[OK, I'm stepping off my soapbox now.]

<< *at what point* does any of this become statistically significant to you?>>

Depends what you mean by "statistically significant" in this case. If you are asking me how many times will the DOGS have to beat the market before I believe in the strategy the answer is: not in our lifetimes. This is because I *understand* that there is no reason why this HAS to be so.

<< And BTW, in a post to Pixy you said the Dog theories rely on a strong economy and
cherry-picking the best stocks... but the periods I've given you above take into account both weak
and strong economies, and there is a long enough time horizon there to negate any "luck factor" in
picking good stocks. >>

Are you serious? The US economy hasn't been strong in the 20th century? Let me assure you that if you followed a DOGS strategy in the Zambia your average returns would have been quite low.

Cheers,
John Power
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