The hidden ‘replication crisis’ of finance

It may sound like a low-budgetBlade Runnerrip-off, but over the past decade the scientific world has been gripped by a “replication crisis” — the findings of many seminal studies cannot be repeated, with huge implications. Is investing suffering from something similar?

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In statistics, a p-value is the probability of whether a finding could be because of pure chance — a simple data oddity like the correlation of Nicolas Cage films to US swimming pool drownings — or whether it is “statistically significant”. P-scores indicate whether a certain drug really does help, or if cheap stocks do outperform over time.
In statistics, a p-value is the probability of whether a finding could be because of pure chance — a simple data oddity like the correlation of Nicolas Cage films to US swimming pool drownings — or whether it is “statistically significant”. P-scores indicate whether a certain drug really does help, or if cheap stocks do outperform over time. (Foto: Franco Origlia/Getty Images)