Certainly there is value in the work of academicians in university departments of finance and economics. To state one example, the Black-Scholes formula for the appropriate price of a stock option is a mathematical achievement— it is based on Itô’s stochastic calculus and the theory of heat conduction— and outside of the realm of the listed stock-option market it helpfully informs us that there are inevitable cumulative costs of stop-loss trading of which we should be wary.

    The basic principles of statistical analysis have primarily been advanced by academicians and are indispensable for charactering the trustworthiness of any scheme for asset allocation that we might produce. The refutation of the “null hypothesis”, the counterclaim to the effect that a good outcome is really just due to chance, is one such approach and the concept is the work of an academic statistician. But statistical science progresses and one of the most exciting improvements of recent years by statisticians has been the development of “shrinkage estimators.”

    It was by repurposing a certain such estimator that Mike O’Connor was able to develop the dynamic allocation scheme that produced the market-risk-avoiding results that are now featured in these pages. See the Home page or Market-Risk Avoidance Overview under the Performance menu.

    Hence this project is being conducted with some considerable regard for and use of the works of academicians. However the emphasis is on presenting a mathematically-correct, easily understood and clearly valid empirical approach.