3 ms·

At first, I thought we had a misunderstanding but now that I see your point, I have to disagree. Survivorship bias basically is a sampling error and, in this c

by HSO 16y ago

At first, I thought we had a misunderstanding but now that I see your point, I have to disagree. Survivorship bias basically is a sampling error and, in this case, leads you to underestimate the risk of your investments, both of which are never a good thing. Moreover, in almost all cases, it's a tad fatalistic to say "there's nothing we can do about it". I mean, maybe if the world goes under, but anything short of that, I'd like to think there's always sth I can do about it (even if that's just trading one bias for another... ;)

nostrademons 16y ago
Sampling error is when your sample doesn't match the properties of the population that you're trying to infer for. It's not sampling error if you actually meant to study only the population that you're looking at. I'm saying that when it comes to asset performance, "Countries with a stable political system and market economy" is a better sample than "all countries", at least when you're investing domestically. The reason for this is that if your home country undergoes political turmoil, you'll need to special-case that anyway. It's very likely that your assets will be seized by force; it's fairly likely that you will be too, and potentially lose your life. Your priority is staying alive and getting out of the country, not preserving $X million in wealth. It's highly unlikely that the country you emigrate to will be able to recognize any claims you might have had on assets in a country in turmoil. The best you can do is to get out and have sufficient friends & skills to rebuild your life.
- HSO 16y ago
  > I'm saying that when it comes to asset performance, "Countries with a stable political system and market economy" is a better sample than "all countries", That's like saying "I'll buy only stocks that go up". You didn't know, in 1900, that the 20th century would be America's.
  - nostrademons 16y ago
    That's fair enough. I suppose you might have some clues, like "Get the hell out of Germany when Hitler came to power", but yeah, you can't predict the future.

by HSO 16y ago

nostrademons 16y ago

Sampling error is when your sample doesn't match the properties of the population that you're trying to infer for. It's not sampling error if you actually meant to study only the population that you're looking at. I'm saying that when it comes to asset performance, "Countries with a stable political system and market economy" is a better sample than "all countries", at least when you're investing domestically. The reason for this is that if your home country undergoes political turmoil, you'll need to special-case that anyway. It's very likely that your assets will be seized by force; it's fairly likely that you will be too, and potentially lose your life. Your priority is staying alive and getting out of the country, not preserving $X million in wealth. It's highly unlikely that the country you emigrate to will be able to recognize any claims you might have had on assets in a country in turmoil. The best you can do is to get out and have sufficient friends & skills to rebuild your life.

HSO 16y ago
> I'm saying that when it comes to asset performance, "Countries with a stable political system and market economy" is a better sample than "all countries", That's like saying "I'll buy only stocks that go up". You didn't know, in 1900, that the 20th century would be America's.
- nostrademons 16y ago
  That's fair enough. I suppose you might have some clues, like "Get the hell out of Germany when Hitler came to power", but yeah, you can't predict the future.