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Sunday, 23 April 2017

Survivorship Bias







14 comments:

  1. One day I will show ToTo Jackpot Grp 1 or 2 winning on my blog!

    ReplyDelete
    Replies
    1. CW,

      Don't block me.

      I've been patiently buying and waiting for 30 years now...

      One day if I struck the Group 1 prize, I will start my seminar on how to get rich by buying Toto.

      If I can do it, so can you!

      LOL!

      Delete
  2. A not too bad of an attitude could be: Any time we see an approach of offering secrets, formulas, rules, or attributes to achieve success, remind ourselves that someone is selling me a quack remedy. Those quackers rarely recognize nor mention the role of luck.

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    1. Andy,

      Or when we adulate investing stars like Warren Buffet or Peter Lynch, we conveniently "forget" that 75% of professional investors fail to beat their respective benchmarking indexes...

      And that's something most retail investors fail or refuse to address.

      The odds for DIY active investing are against us...

      But for a man-whore who likes to argue with the STOP sign, sailing AGAINST the wind is right up my alley!

      And after my sound and fury war cry, what do I do?

      I picked up Trend Following.

      What the f...!?

      LOL!

      Delete
    2. Exactly, we better spend more time on looking for stuff we can't see.
      Th good stuff is often hidden by the fat attention seeking obvious stuff.
      Trend Following. You? I am a tiny bit disappointed. But knowing you a bit I am sure you do have a not-so-obvious strategy behind trend following. Like looking at what the trend does and doing the opposite right in time when it has become too trendy already.

      Delete
    3. Andy,

      That's the advantage of meeting and sizing each other up in real life ;)

      Trend Following is not the same as herding.

      Plain vanilla Trend Following is mostly systematic; I am discretionary.

      That's the equivalent of me saying I am an ACTIVE index investor!?

      LOL!

      Delete
  3. Survivorship Bias?

    Look no further than DOW Jones, Nasdag, STI, in fact all the major Indexes of the world.

    Knowing this, is there an advantage to buy STI ETF or even S & P 500 for the long term?

    i think there is.

    Sure survive ma!

    ReplyDelete
    Replies
    1. temperament,

      I find those retail "investors" fascinated with STI ETF are exhibiting classic Home Bias.

      I mean those double digit GDP turbo boost growth days of Singapore during the 70s and 80s are long gone...

      If I am a betting person with 20 to 30 years ahead of me, I would bet on Indonesia, Thailand, and Philippines stock indexes.

      And if you no time to investigate at single country level, then an Asia Pacific ex Japan ETF would do just fine - it even includes our Singapore shares too!


      The world is big and interesting.

      Our region is so dynamic and full of potential.

      But no...

      We just hug our little Red Dot to bed.


      Which is ironic.

      We physically love to take vacation overseas, yet our hearts are still pretty much parochial when it comes to investing!?

      Interesting.



      Delete
  4. Hi SMOL,

    It's hard not to have survivorship bias. As I was reading my childhood development textbook, they talked about the concept of object permanence for babies. If they can't see the object, they take it that the object disappears - which is why babies delight in playing peek-a-boo. They have no concept that an object can exist even when they didn't see it. They slowly grow the concept of object permanence as they mature.

    Survivorship bias is the same isn't it? What we cannot see, we take it as not there. I'm sure my millions of brothers and sisters that swam with me will agree with me.

    ReplyDelete
    Replies
    1. Very valid point.
      Who said it is easy? Overcoming bias is smart work. Awareness is the first step. Followed by learning to recognize situations in which mistakes are likely and trying harder to avoid significant mistakes when the stakes are high.

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    2. LP,

      What is the bias for believing in the existence of things we can't see when we grow up?

      Faith?


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    3. Andy,

      Funny how our discussion on psychology can apply to the realm of spirituality.

      And its especially relevant to the arena of investing and trading too!

      Recognising its not easy we already have an "edge" over those investors/traders who think all you need is just 5 minutes a week.

      We don't need to outrun the bear; we just need to outrun the other hunter ;)


      Delete
  5. Hi SMOL,

    Object permanence is seeing something first, then it disappears from your line of sight and you thinking that the object is still there and not disappeared because you can't see it. Faith might be believing in something even though we can't see it yet. If you already see signs of something happening, that doesn't require faith.

    "What is the bias for believing in the existence of things we can't see when we grow up?" - I don't know...a healthy imagination? Hahaha

    ReplyDelete
    Replies
    1. LP,

      LOL!

      Next time you have empty space in your schedule, let me know so we can jio Andy out for coffee!

      We don't talk about boring "bronze-smell" investing/trading stuffs.

      We banter with man of leisure topics like metaphysics!

      Delete

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