Survivorship Bias with Planes in WW2 from Abraham Wald

>> YOUR LINK HERE: ___ http://youtube.com/watch?v=YntbMpR94f0

Survivorship bias describes the tendency for humans to only pay attention to the outcomes that survived in investing. This means we remember the stocks and funds that survive and thrive, but forget the ones that go under or are otherwise excluded from the data. Perhaps the best example of survivorship bias is outside the world of finance, but the illustration is worth it. In World War Two, the British were losing planes that were being shot down over Germany. They wanted to add armor to specific areas of the planes to make them more resilient. So they looked at the planes that returned to see where they were being shot the most. Overlaying the diagrams produced this result, thankfully, before adding extra armor to those sections of the plane, they got a second opinion from a Hungarian mathematician named Abraham Wald, who immediately pointed out that these were only the planes that survived, and that they were forgetting about all the planes that were shot down. He proposed reinforcing precisely the opposite areas of the plane as planes were crashing because they were being shot in these areas. • #investing #behavioralfinance #biases • // INVEST • ► M1 Finance: https://optimizedportfolio.com/go/m1 • ► My comprehensive review of M1 Finance: https://www.optimizedportfolio.com/m1... • ► Get my dividend portfolio: https://www.optimizedportfolio.com/m1... • ► Lazy Portfolios: https://www.optimizedportfolio.com/la... • ► Beginners’ reference guide (updated regularly): https://www.optimizedportfolio.com/be... • ► Webull (for stock traders; get 2 free stocks): https://act.webull.com/kol-us/share.h... • // SOCIAL • ► Website: https://www.optimizedportfolio.com/ • ► Patreon: / optimizedportfolio • ► Facebook: / optimizedportfolio • ► Instagram: / optimizedportfolio • ► Twitter: / optimizedport • ► Support my channel by shopping on Amazon (free for you): https://amzn.to/2TLCgCc • I appreciate all the support! • Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here: https://www.optimizedportfolio.com/te... • Disclosure: Some of the links above are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality content on this channel and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful.

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