Survivorship bias

Testing on a universe that was selected precisely because it survived, such as backtesting today’s index constituents over past history. Because membership is reconstituted upward, losers are silently excluded and winners silently included, so the result is a bet on hindsight rather than a strategy. The fix is reconstructing point-in-time membership, or honestly discounting the result.

First used in Lesson 2.5 · The bias catalog: hunting the ways a backtest lies — the lesson that makes this term real.