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Mice Telomeres and its impact on Backtesting

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I am going to take you on a most fascinating yet obscure path to illustrate something I feel quite strongly about. We are about to go down a path in evolutionary biology that is controversial to say the least and I will link this to a very important part of the finance industry. Many of you who know me will know that I am a contrarian thinker and to be honest I have been fighting nihilistic thoughts related to my chosen fields of study, i.e. finance and economics. Being creative and bold, especially over this last couple of weeks of vacation, has allowed me to reconcile a lot of the different theories I have had running around in my mind.


About 20 years ago in a world far far away from yours a young graduate theoretical biologist named Brett Weinstein made a shocking discovery. There is so much to learn from the back story of his discovery, such as, a Nobel Prize winning Biologist Carol Greider allegedly stealing Brett’s idea to further her own illustrious career; but we will save that for a rainy day. I want to get back to the amazing discovery Brett made that saw him ostracized from the scientific, academic and big pharma establishment and saw his incredible research discovery left in the academic research literature backwaters. 


What are Telomeres? 


They are an essential part of human cells that affect how our cells age. Telomeres are the caps at the end of each strand of DNA that protect our chromosomes, like the plastic tips at the end of shoelaces.


The Hayflick limit is the number of times a normal human cell population will divide before stopping (if cell division continues on for too long, it’ll lead to cancer). This is a brilliant move by natural selection when one thinks about it. For example, cells divide whenever a human gets injured to heal a wound, but won’t reproduce infinitely (as it would lead to cancer).


The discovery Brett made is that he noticed that the Telomeres of the mice used in most of the research at the time (80%) came from a single laboratory called the Jackson Laboratory. The mice that researchers around the US were using to produce their experiments were not wild mice but rather lab bred mice from one source. Brett discovered that these mice bred in captivity had much longer Telomeres because they weren’t exposed to the same threats nature produces in the wild. What this essentially did is provide results for the scientists that did not show a true reflection of the likely cancer markers in the tests and therefore allowed the FDA to approve many drugs that are not fit for human consumption that do in fact lead to cancer.


Let us now move away from the biology and focus on what the hell this has to do with finance.


I feel the need to make a big bold statement. I believe you can almost never trust a backtest result. When doing research you are forced to make assumptions to try and create an environment as true to reality as possible. In bio-medicine you use animals that are similar to humans. In trading you use scenarios that try and mimic trading reality. However people conducting these tests are biased to produce results that will support their thesis or business model. That is why skin in the game is a most vital ingredient to producing honest bias free research. Because big pharma and scientists mostly don’t have family members using what might be deadly drugs they are blinded by biases in order to produce results that will provide them with fame and fortune. The same is true with trading backtest results by many of the people we encounter in our trading world. We have all been presented with these attractive looking equity charts and fancy presentations telling us about these amazing trading systems. I urge you all to treat these backtests with the skepticism they deserve.


Last year we launched a super powerful tool to help you avoid making those mistakes called an EA Backtester. Somehow we need to make sure this tool is more easily understood and made easily accessible to use.


I want to conclude by saying PsyQuation and our team are committed to making this year our most productive yet. We have built a suite of tools that will help you become more profitable. Our focus now is to make these tools understandable for our fast growing community.

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