Successful Trials in MC Simulation Results R28 p. 191

[burton]

Reference Exhibit 3, Section 4, Reading 28, Private Wealth page 191.

What is the relationship, if any, between successful trials and the distribution of simulation results?
Could a portfolio value that landed in the 99th percentile at the end of 10 years still be considered a successful trial if the value exceeded a client goal? Conversely, could you have an unsuccessful trial where the value is in the 5th percentile?

Thanks

[S2000magician]

@burton

Could a portfolio value that landed in the 99th percentile at the end of 10 years still be considered a successful trial if the value exceeded a client goal?

Yes.

@burton

Conversely, could you have an unsuccessful trial where the value is in the 5th percentile

Yes.

Could they happen simultaneously?

No.

@burton

What is the relationship, if any, between successful trials and the distribution of simulation results?

Success depends on the relationship of the goal to the outcome(s). If 95% of the outcomes exceed the goal and 5% do not, then the probability of success is 95%. If 1% of the outcomes exceed the goal and 99% do not, then the probability of success is 1%.