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Investors should approach the TipRanks Smart Score performance metrics with caution. These figures are derived from backtested results and should not be considered an accurate predictor of future outcomes. It’s important to note that the performance data reflect a strategy which investors have not historically had access to, meaning the returns shown do not correlate with any actual investor experiences.

The backtesting process involves retroactively applying a model based on historical data, making assumptions that are fundamental to the model. Key general assumptions include the premise that XYZ firm would have been capable of purchasing the recommended securities and that market liquidity was sufficient for all necessary trading. Changes to these assumptions could substantially affect the presented backtested returns.

Crucially, these models are constructed with hindsight, meaning they benefit from knowing past market movements — a luxury not afforded in real-time trading. Therefore, backtested results are not subjected to the real-world economic and market pressures that influence actual trading decisions. They often fail to account for factors such as liquidity constraints or economic shifts, which can drastically affect market behavior.

Moreover, the methodology used in backtesting can be tweaked to maximize past returns, thus skewing the data. Consequently, real-world performance may differ significantly from what backtested data suggest. The results also include reinvested dividends and other income, and typically exclude transaction costs, management fees, performance fees, or other applicable expenses.

In summary, while backtested data may offer some insights, investors should remain vigilant and understand that these figures come with significant limitations. Always consider the broader economic context and inherent uncertainties when interpreting such performance metrics.