Should you trust your financial advisor? Pseudo-mathematics and financial charlatanism
Your financial advisor calls you to suggest a new investment scheme. Drawing on 20 years of data, he/she asks: If you had invested according to this scheme in the past, which portfolio would have been the best? His/Her computer assembled thousands of simulated portfolios and calculated for each one a measure of return on risk. Out of this calculation, your advisor has chosen the "optimal" portfolio, which he/she recommends, noting it is based on sound mathematical methods. Should you invest?
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