Is an enormous issue, and one of the biggest NO-NOs if you are a quant.
If you are not familiar with survivor bias it is when a backtest, or reported results, exclude companies that have been delisted due to mergers, acquistions, bankruptcies, etc. If you are a long time World Beta reader you would recall the fantastic Blackstar study that shows just how big of a deal this is. Roughly 20% of all public company stocks go to zero. And that is the Russell 3000, not even small and micro penny stocks where it would be much worse.
Anyways, I was reading an article that reported some backtests based on Wealth Lab (Fidelity bought them) and I seem to recall that their tests suffer from survivor bias?
A somewhat befuddled Fidelity rep confirmed that indeed this was the case. Any Wealth Lab Pro users on here?
