During World War II, the Allied bombers suffered heavy losses. The military brought in statistician Wald to help improve aircraft defense designs. The officers took Wald to the hangar. They pointed to the planes returning from missions and said, “Look, the wings and tail are covered with countless bullet holes.” “This indicates that these areas are the most vulnerable to gunfire.” “We should reinforce the armor on the wings and tail.” Wald took a quick look and shook his head. He said something that shocked all the generals: “No, you’ve got it completely backwards.” “The areas you should reinforce are the places without bullet holes.” The generals were confused: “Why? Those areas clearly weren’t hit.” Wald explained, “The planes you see here, although they have been shot, can still fly back safely.” “This shows that the wings and tail are not the fatal parts.” “And what about the planes with hits on the engines and cockpit?” “They never make it back.” “They’ve crashed on the battlefield, turning into silent data.” “You don’t see them, but they are the ones that need protection the most.”🖊 This is called “survivor bias.” We tend to analyze only the cases of those who “survived.” We study Buffett, successful traders, trying to summarize their winning strategies. But we often overlook the fact that thousands of others did the same thing. Due to bad luck, they became the “planes that didn’t make it back.”