FinancialAnaly

pepp Wrote:
-------------------------------------------------------
> Dreary,
>
> As you add more and more independent variables to
> a regression, its likely that it's R2 will go up,
> as long the newly added independent variable
> explains slight of the variation in dependent
> variable, or in other words is correlated to
> dependent variable.
>
Yes, I accepted that and moved on...but why would adding another independent variable *necessarily* improves, or at least not reduce the explanatory power? It seems you could add another independent variable which would worsen the model, not improve it!