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Text File  |  1993-01-12  |  863 b   |  23 lines
  1. Newsgroups: sci.econ
  2. Path: sparky!uunet!well!well.sf.ca.us!hank
  3. From: hank@well.sf.ca.us (Hank Roberts)
  4. Subject: "Fund Evolution" (WSJ 1-7-93 p.R-6)  ?!
  5. Message-ID: <hank.726886606@well.sf.ca.us>
  6. Summary: "survivorship bias" in averaging
  7. Sender: news@well.sf.ca.us
  8. Organization: Whole Earth 'Lectronic Link
  9. Date: Wed, 13 Jan 1993 00:56:46 GMT
  10. Lines: 11
  11.  
  12.  
  13. The Wall Street Journal has an article titled Fund Evolution.
  14. It appears that in describing how mutual funds performed historically,
  15. the common practice is to _drop_ from the averages any company that's
  16. gone out of business subsequently.  The more successful ones remain
  17. so the "average performance" is distorted; and distorted increasingly
  18. as time goes by.
  19.  
  20. They actually drop the unfavorable trials and report only the favorable ones.
  21.  
  22. This bothers me.  Is it commonly done elsewere in economic reporting?
  23.