The dangers of retrospective modeling...

As an owner of index funds (really ETFs), I am as guilty of drinking the Kool-Aid as everyone else. Alas we all know that reductionist models using inductive reasoning can have their own risk, especially when everyone else seems to be using the same model.

With this thought in mind, Felix Salmon has an interesting piece in Reuters today that is well worth reading (H/T Megan McArdle)

PS- All medicine is retrospective modeling hence the old adage: "Half of what is taught in medical school is wrong, but no one knows which half."

PPS- Any of you see areas where you think inefficiency exists. JP has spoken about "personalized" medicine based on better information and this is a very interesting topic