Ramit Sethi explains how mutual fund companies use survivorship bias to deceive investors. They hide underperforming funds and only show winners, making 90-95% of their offerings appear to be 5-star rated. The ratings are fake, and investors keep falling for it.
Do you understand the fucking scam being run on you? I'm about to break this scam down right now. If you look at how mutual fund companies evaluate their investments, they'll say something like, 90% of our mutual funds are rated 5 stars. And you go, oh wow, that sounds really good. I should probably invest. I love stars. So cool. Then if you dig in deeper, you discover whenever a mutual fund underperforms, The fund company takes it out back and shoots it in the head. They go, ah, fuck this mutual fund, get the fuck out. And so the only ones that persist after 7 or 10 years are the ones that are still performing. Do you understand the scam? Because you're the one being scammed. They only show you the best performing ones, and therefore by default they are 95% 5-star funds. This is called survivorship bias. Please learn about it. You don't even realize the game that's being played around you, but you are the victim.
