Glossary
Market regime
A persistent market environment — e.g. a bull market, a high-volatility crisis, a low-rate era. A strategy that wins in one regime can lose badly in another, so single-regime results are weak evidence.
In plain terms
The trap is that regimes last years — long enough for a strategy to build a convincing track record that is really just one weather pattern. Anything tuned on 2010-2021 implicitly learned 'rates are zero and dips get bought', and 2022 punished exactly that.
Regime-switching models exist but mostly detect a regime after it has changed, which is when the damage happens. Our response is duller and sturdier: test every strategy across multiple decades and eras, and distrust anything that only wins in one of them.
Related terms
Educational definitions only. Not investment advice.