Chapter 2: The Model-Building Process
- Intro
- The Model-Building Process
- Where to Start: Model Inputs
- Sentiment and Valuation Indicators
- Monetary Indicators
- Economic Indicators
- Internal Indicators
- Moving Averages
- Crossings and Slopes
- Momentum
- Putting Indicators Together
- Conclusion
- Gather as much objective, quantitative data as possible
- Make certain the information is accurate and can be updated in a timely manner
- Test data against the market to determine if they have any potential predictive value, making sure not to over-fit the data to historical prices
- Use different types of indicators (trend, monetary, sentiment, etc) based on historical reliability and ability to complement each other
- Combine the indicators into a model that gives a single composite reading. Weight them equally or by relative importance or historical accuracy
- Test the model to see if it provides reliable results
- use the model as the basis for disciplined investing
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