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Long-term investing · 6 of 6

Reading factors vs the baseline — the only honest comparison

A factor's numbers mean nothing without the unconditioned baseline next to them. Learn to read the lift, not the level.

A trading skill, taught as a rule + its measured base rate. Educational — never a recommendation to buy or sell.

Every factor table here includes a baseline row: all bars, no condition. It is the single most important row, because it’s the yardstick. A factor is only interesting to the extent it beats that baseline.

Level vs lift

“Above the 200-day line returned +X% over 12 months” sounds great — until the baseline was +X% too, meaning the filter added nothing. Always subtract: the lift (factor minus baseline) is the real, tradeable edge. Marketing quotes the level; honesty quotes the lift.

Stacking factors

Combining factors (trend + momentum + not-overbought) can compound the lift — but only if they’re not measuring the same thing. Read their lifts side by side to see what’s additive and what’s double-counting, and remember every number still carries the survivorship caveat.

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Educational content on trading concepts and their historical base rates, measured on survivorship-free US-stock history. Past statistics do not predict future results; nothing here is investment advice or a recommendation to buy or sell any security.