When you first start out in finance many facts are thrown at you, and without the time or energy to check each and everyone of them you go with the flow.

It's a little like your dad being a 9/11 conspiracy theorist or you mom sticking Abba on the record player non-stop.

You don't know any better.

You grow up, you have to figure somethings out for yourself, if you're smart avoid joining a cult or the technical analyst community.

This process never stops.

Growing up in Ireland I knew nothing about sex. Luckily David Spiegelhalter has written a book about taking a scientific approach to studying sex.


I finally know that I am above the average time of this and median length of that. A weight off my mind.

The challenge with sexual statistics of course is that they're shrouded in taboo.

Spiegelhalter goes deep and filters the hard facts from the wobbly myths.

To that end he uses a star rating system.

For example.

4 stars are official statistics with very large samples.

Births, marriages, abortions and divorces. He tells us that there is indeed a seven year itch - people are most likely to divorce after seven years of marriage.

Note to self - never get married.

3 stars are awarded to surveys with large samples that try to ensure random sampling. Academic surveys covering how many times people have sex a month and how many partners people have are covered. Spiegelhalter says these numbers are accurate plus or minus 20 percent.

Tidbits: way more women are having same sex relationships nowadays; also, the UK is becoming less sexually active! Internet is such a time sink.

Then you have the 2 star ratings. Such as ones carried out by biologists in the 1940s which pinpointed small groups they suspected were sexual extremists and recorded their proclivities.

Finally, 1 star, is awarded to internet surveys where no statistical care is applied. E.g. the Timeout London survey for 2013.

Timeout tells, us a third of men would definitely sleep with their best (girl) friend, but a third of women would definitely not.


If there is any taboo-laden subject that can trump that of sex it is portfolio managers and what they do to their fund's returns in the privacy of their own office.

The finance industry is bad when it comes to telling the truth. Bad in a S&M way.

So here's my star ratings for financial analysis.

4 Stars. Peer reviewed (in a top journal) and widely applied research (across time, assets and geographies). This includes Fama-French value, small cap research; pay the lowest fees and buy the index Bogle advice.

3 Stars. Careful attention to methodological detail, plausible economic rationale.

2 Stars. A whiff of numeracy. A nod to statistical correctness (egads, a Sharpe ratio!). Anything that claims to be technical analysis or name checks moving averages.

1 Star. 'Buy in May and Go Away' memes which are closer to astrology than econometrics.

Anyone care to send me some statistical analysis and suggest a rating? Get in touch, John.Orford@gmail.com.