Probabilities of Success
A 10-Year Systematic Ranking Analysis (2016 – 2026)
The Testing Formula
To prove stock filter ranking is a legitimate winner and not just a result of luck, we utilized a simple, transparent example formula:
Gain over X number of weeks.
- The Sample: 31 iterations, testing X values from 30 up to 60 weeks.
- Strategy: Ranking the pool weekly and buying the top 5 performers for a 10-year duration.
- The Universe: Conducted on the 57 current NDX 100 stocks that were part of the index as of January 1, 2016.
Performance Distribution
43.22%
High Return
26.77%
Low Return
97%
Samples > 30%
All but one (97%) of the samples exceeded a 30% return over the 10-year period.
The Probability of "Luck"
To verify the strength of the system, we calculated the probability of randomly picking 5 of the 57 stocks to hold for 10 years and earning a return exceeding 30%, simulated across 4 million+ samples.
0.7092%
Probability of Random Success
1 in 141
The Odds
CONCLUSION
Even with a very simple formula, using a systematic method of a ranking filter produces superior returns with a high probability. These results are nearly impossible to achieve through individual stock picking or random chance.
Looking forward, no one can predict exactly what will happen. However, if disruptive innovations continue to occur, a systematic ranking filter remains one of the highest-odds methods for capturing growth. For example, major emerging entities like SpaceX are already slated to join the NDX100 soon after their IPO, providing fresh opportunities for these ranking systems.