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Patrice Bergeron a patch jerseys -

The Survivorship Bias

The term "Survivorship Bias" is often used in finance classes across the B-Schools. In slightly technical terms, it means that while analysing the performance of the market, only those companies which survived are taken into account while the companies which failed are excluded. Therefore, the results are always skewed towards the higher end of the performance.

In very simple terms, the companies, which failed in due course of times, were obviously the worst performers. If you exclude these, out of the sample, naturally the average will be higher. This is the way, performance parameters are calculated and we tend to believe the results coming out of forged sample collected by young analysts being driven by Patrice Bergeron a patch jerseys extreme greed.

Lets' take some examples of the omnipresent "Survivorship Bias" in daily life:

?"If you had invested Rs. 10000 in INFOSYS stock during the IPO of this company in 1993, you could have made Rs. 1.5 Cr by the end of 2007."

Analysts tell such facts to justify their stock recommendations. Well, they don't tell us that the IPO of INFOSYS was undersubscribed by 10% at that time and the Finance Minister of India himself had to intervene to make way for INFY to issue shares at a premium. There might be hundreds, if not thousands, similar companies which went public between 1993 and 2001. How many of them survived? If I had invested Rs. 10000 in each of these companies at the time of their IPO, what would be my portfolio Patrice Bergeron a patch jerseys value today? At the time of inception of a company, how do I know that this company is going to be an INFOSYS or a Home Trade (Remember that???). Unfortunately, nobody can see the future and hence we go back to the EXPERTS with such questions. And what do the experts do? They only give the examples of INFY, Reliance, and WIPRO.

These experts are the living legends for Survivorship Bias.

"Traders don't make money, investors do. See Warren Buffet"

This is a classic example. We always quote Warren Buffet, because he is the most successful investor. There might have been million other investors who might have lost everything during the crash of 70's and 80's. But we exclude them from the sample and analyze investors like Warren Buffet and Benjamin Graham. On the other hand, there might be thousand of traders, who Patrice Bergeron a patch jerseys opt to exit the market at right time and made a fortune. Do we analyse them? No, because no one knows them. We know, either Warren Buffet or John Meriwether (LTCM founder).