History and returns
Price and return tables, seasonality, and testing rules on history.
Start
- 4 lessons
- 18 min
About this section4 goals5 key words
The past in numbers: the price table, the returns table, the calendar view of returns, and testing a simple rule on history, with the reasons to distrust that test.
What you will be able to do
- Read a price history table and check its arithmetic.
- Tell an interval return from a total return, and chain one into the other.
- Read a seasonality grid and explain why "July is always up" is weak evidence.
- Run a backtest against buy-and-hold and name three ways it can fool you.
Five words to know
- close
- the last price of a session, the daily reference number
- return
- price change as a percentage of where it started
- compounding
- returns stacking on top of earlier returns
- buy-and-hold
- buy once, never sell: the baseline every rule is compared with
- sample
- the slice of history you happened to look at
- 01The price history table (HP)
HPis the chart turned into rows: one line per bar with open, high, low, close, the change from the bar before, and volume.4 min - 02The returns table (RETURN)
RETURNlists the return of each period and the return since the start of the window, so you can see how small moves compound.4 min - 03Seasonality (SEAS)
SEASlays out a ticker's monthly returns year by year with each month's average, median and share of up years, and shows why calendar patterns are weak evidence.4 min - 04Backtesting a rule (BT, BTST)
BT(alsoBTST) replays a simple buy-and-sell rule on a stock's daily history and compares it with buying and holding, trade by trade.5 min
Educational material about reading market data, not investment advice.