The Stockopedia StockRanks are proving more and more popular, not only as a stock picking guide but also as an educational framework to what works in investing. One of the main goals of the system was to be able to rank every stock in the UK market, regardless of sector or stage of their business cycle, while aligning the site closely with the key findings of academic finance. The exceptional performance of the ranks since launch has surpassed even my own expectations, but their growing influence does mean we have a responsibility to help subscribers understand, and not misuse them. This post I hope will go some way to clarify how to 'think' about the StockRanks.Never cross a river because it is on average 4 feet deepOne of my favorite of Nicholas Nassim Taleb's maxims is that you should "never cross a river because it is on average 4 feet deep". Nicholas Nassim Taleb, as a derivatives trader and the author of "Fooled by Randomness", has an understanding of probability that goes much deeper than most. What he meant was that while averages are extremely useful, they...
