Yo!
There are a lot of stories out there about the kid who invested $500 in Gamestop stock or meme coins and made a bunch of money. While those stories are real, what you don’t hear about are all the people who risked a few thousand and ended up losing all their money.
The stories we most often hear are about those who make money. This is called survivorship bias. It’s the tendency to concentrate on the winners. Survivorship bias can manipulate the narratives we hear and lead many into making a false conclusion.
As we continue to hear about the many folks profiting from NFTs or sports betting, don’t forget about survivorship bias. We don’t hear stories of those that have lost a few hundred or a few thousand dollars. The next time you’re feeling FOMO reading about the kid that made $20,000 trading meme coins, remember there are folks in the opposite position that we don’t often hear about.
Your favorite finance friend,
