Ran a Monte Carlo simulation on our mean reversion engine to answer one question: does it actually pick better stocks than random?

PracticalOil9183 · 2026-04-14T00:32:58+00:00

=== SUMMARY === - The author presents validation results for a mean reversion stock selection engine, comparing its performance to random selection via a Monte Carlo simulation. - The thesis is that the engine possesses statistically significant stock selection skill, separate from market timing, as demonstrated by outperforming 98.6% of random picks on out-of-sample data from 2016-2025. - Quality assessment: Well-researched DD. The author provides rigorous statistical validation (Monte Carlo, p-value, out-of-sample testing), acknowledges the illustrative nature of some charts, includes transaction costs, and provides a GitHub link for reproducibility. === SENTIMENT === NEUTRAL === TRADE IDEAS === No actionable trade ideas in this post.

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The author presents validation results for a mean reversion stock selection engine, comparing its performance to random selection via a Monte Carlo simulation.
The thesis is that the engine possesses statistically significant stock selection skill, separate from market timing, as demonstrated by outperforming 98.6% of random picks on out-of-sample data from 2016-2025.
Quality assessment: Well-researched DD. The author provides rigorous statistical validation (Monte Carlo, p-value, out-of-sample testing), acknowledges the illustrative nature of some charts, includes transaction costs, and provides a GitHub link for reproducibility.

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