Beware of Survivorship Bias When Investing
Money For the Rest of Us
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Introduction
David Stein: I have an earthquake insurance policy that is up for renewal. He says the probability of an earthquake with a magnitude greater than five is close to 20% over the next 50 years. This is an example of survivorship bias, where we focus on what has been successful and ignore failures. In Idaho, there's a 73% chance of an earthquake greater than 5.0 in the next50 years.
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