Hacker News Reader

Comment by spiritplumber | Hacker News Reader

My husband and me made a stock market analysis thing that gets it right about 55% of the time, so better than a coin toss. The problem is that it keeps making unethical suggestions, so we're not using it to trade stock. Does anyone have any idea what we can do with that?

View on HN

Suggestion: calculate the out-of-sample Sharpe ratio[0] of the suggestions over a reasonable period to gauge how good the model would actually perform in terms of return compared to risks. It is better than vanilla accuracy or related metrics. Source: I'm a financial economist.

[0]: https://en.wikipedia.org/wiki/Sharpe_ratio

thank you! that's exactly the sort of thing I don't know.

You can literally flip coins and get better than 50% success in a bull market. Just buy index funds and spend your time on something that isn't trying to beat entropy. You won't be able to.

INSUFFICIENT DATA FOR A MEANINGFUL ANSWER.

Have you backtested this in times when markets were not constantly green? Nearly any strategy is good in the good times.

yep. the 55% is over a few years.

Right, but if 55% is avg over the last few years, “buy stock” is going to be correct more than not.

https://www.crestmontresearch.com/docs/Stock-Yo-Yo.pdf

I think this is a good highlight of why context and reality checks are incredibly important when doing work like this. At first glance, it might look like 55% is a really good result, but in the previous year, a flat buy every day strategy would've been right 56.7% of the time.

55% means basically nothing in this context if even money. Long 45% to 55% is most likely completely random because it is symmetric with shorting 45% to 55%

Exactly what you would expect from a language model making random stock picks.

I'm curious what sort of unethical suggestions it's coming up with haha

so far, mostly buying companies owned/ran by horrible people.

So if you filter out the Republican owned ones or whatever your bugbear is, does the 55% persist?

Can't you adjust the prompt to filter out companies that fund genocide etc?

What data do you analyze?

Reply on news.ycombinator.com