Adaptive specification search generates statistically significant backtests even under martingale-difference nulls. We introduce a falsification audit testing complete predictive workflows against synthetic reference classes, including zero-predictability environments and microstructure placebos. Workflows generating significant walk-forward evidence in these environments are falsified. For passing workflows, we quantify selection-induced performance inflation using an absolute magnitude gap linking optimized in-sample evidence to disjoint walk-forward realizations, adjusted for effective multiplicity. Simulations validate extreme-value scaling under correlated searches and demonstrate detection power under genuine structure. Empirical case studies confirm that many apparent findings represent methodological artifacts rather than genuine predictability.
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