Riskalyze Questions Methodologies Of Orion's Hidden Levers And Rixtrema
May 12, 2021
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Rixtrema’s Predictive Guesswork Hasn’t Held Up Either
When their crash test modeled oil dropping 50%, they projected that three different funds would therefore be down between 22% and 38% (Source: Rixtrema's predictions of portfolio behavior in response to changes in oil prices are outlined in Mike McDaniel's 2019 Fearless Investing Summit keynote.)
Soon after, it just so happens that we got to see the scenario play out in real life. Oil actually did drop 50%, and all three funds went up.
If you had been lucky enough to guess the price of oil correctly, the Predictive Guesswork Model would’ve gotten it completely wrong—all because of bad methodology.
Now imagine having to correctly guess on 10 different factors.