Upon inspection, the white line soars above the orange line in 2014, and both lines represent total return:

It's because that chart has a linear Y-axis, not logarithmic. Both lines increased by a similar **percentage** in 2014, but since the white line started near 1500 while the red line started near 750, the white line will rise twice as much for the same percentage increase. In other words, it's not a valid comparison to just drag one line down to the Y-value of the other.

Morningstar uses log charts, so the differences (particularly over long timeframes) will look smaller there than they do on a linear chart. Google allows you to switch between log and linear.

Got it, thanks Skyrefuge!

Reading through the thread again with this in mind, the first thing that pops out is survivorship bias. Probably because the article I posted earlier:

http://youarenotsosmart.com/2013/05/23/survivorship-bias/and the book I'm currently reading,

A Random Walk Down Wall Street. There have been a great number of dividend focused funds over the decades, and I personally haven't seen any actual funds that outperform (feel free to link some, again I'm genuinely curious). When we are pouring over the data to determine why the backtesting of a particular dividend strategy outperformed over a specific time period...we are implicitly making an assumption...that this strategy is special. After all, 100% of the other strategies failed, why did this one win? There must be some

*special* property it exploited.

I believe this assumption is a logical fallacy.

The book has a relevant (in my opinion) example. Take a large number of people, and ask them to flip a coin. If they flip heads they win, tails and they're eliminated from the game. After the first flip, about half the people will be eliminated. Then ask them to flip again, and again, and again. After 10 flips, only a select few people will be left. Are these people "lucky"? Are they "skilled". Would anything be gained by spending time studying their coin flipping strategy?

Interestingly enough, the article linked above has the same example as the book:

"The mentalist Derren Brown once predicted he could flip a coin 10 times in a row and have it come up heads every time. He then dazzled UK television audiences by doing exactly that, flipping the coin into a bowl with only one cutaway shot for flair. How did he do it? He filmed himself flipping coins for nine hours until he got the result he wanted. He then edited out all the failures and presented the single success."

In other words, considering the large initial sample size, I think studying this one particular backtested strategy, and trying to peel out the "why" behind its results, is an effort in futility. Studies have shown time and time again, that funds which outperform over a particular time period, show no increased likelihood of outperforming over the next time period. There was actually a slight

**negative** correlation, implying a reversion to the mean was in play. We're not even dealing with an actual fund in this thread, we're dealing with a backtested strategy. While it might be interesting to check in 20 years and see if NOBL's

*under*performance continues, it will likely end up being just another footnote in the latest edition of A Random Walk.

That said, I don't have anything further about this specific strategy to add to the thread, so enjoy the analysis!