On Survivorship Bias and the Financial Markets (Episode 64)

Updated: December 11, 2021

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Episode Chapters:

  • 01:01: College Dropouts
  • 03:26: Survivorship Bias
  • 05:59: Episode Break
  • 08:19: Best Songs
  • 09:05: Timing the Market
  • 11:56: Trading vs Investing

Excerpts and Highlights:

Just because a particular strategy worked for some people, it doesn’t mean it’s a good strategy for everyone. Because with survivorship bias, you are forgetting others who did the same thing but failed; and those others who failed could be greater in number than those who succeeded.

“A stupid decision that works out well becomes a brilliant decision in hindsight.” –Daniel Kahneman.

Considering survivorship bias when presented with examples of success is difficult. It is not instinctive to pause, reflect, and think through what you’re not seeing.

Understanding survivorship bias is an essential tool to help you cut through the noise and understand the world. It allows you to make fully informed decisions, and increase your chances of success.

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