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Beware of the lies of history

4 Minute Read

Most investors follow economic data in a way or another to assess the concurrent market environment and derive views and forecasts.

This often includes the analysis of historical patterns and relationships between financial markets and the economy.

Unfortunately such analysis is highly prone to look ahead bias induced by revisions often resulting in a flawed perception of the timeliness and reliability of indicators.

Our paper illustrates this problem with a focus on major stock market crashes since the 70s.