Survivor bias. If a mutual fund company runs three funds, two of which do well, one of which does poorly, they will simply dissolve the underperforming fund and continue to report performance on the survivors. They now appear to have a purely successful record, with all their (current) funds performing well. By systematically eliminating negative data, the survivors give a false impression of consistent success. -- GK

This entry was published on March 30, 2006 at 03:35 pm by Greg Knauss.

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