How survivorship bias makes market geniuses look real and why chasing multibaggers can backfire hard

Published on 16 May 2026

Perfect eight-week calls can be manufactured with one tweak

An experiment shows how easy it is to create the illusion of “market genius” by only counting the winners: after each round, the group that was wrong simply disappears, so the remaining universe naturally boasts perfect results. The same mental trap distorts equity investing, where investors fixate on the rare 10x to 100x winners while ignoring the massive failures that made those wins possible. Using Indian stock data since 2000, odds of 5x gains depend heavily on when you enter.

A simple filter-by-winners setup can produce eight perfect market calls in a row
The experiment’s “miracle track record” is actually survivorship bias
Analysis since 2000 compares smallcaps vs large midcaps by market cap
In early 2000s, nearly half of small-cap stocks rose 5x in five years
Post-COVID conditions also made 5x outcomes comparatively common for new entrants
Multi-baggers become more likely after prior steep drawdowns set a low base

#smallcaps #market psychology #survivorship bias #equity investing #multibaggers

Read the full story at The Economic Times

This summarization was done by Beige for a story published on The Economic Times

How survivorship bias makes market geniuses look real and why chasing multibaggers can backfire hard

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