Julius Spence has tested several predictive models in order to identify undervalued stocks. Spence used about 30 company-specific variables and 10 market-related variables to predict returns for about 5,000 North American and European stocks. He found that a final model using eight variables applied to telecommunications and computer stocks yields spectacular results. Spence wants you to use the model to select investments. Should you? What steps would you take to evaluate the model?