The Fallacy of Anecdotal Evidence

Heard this?

“The Tarot card reader was able to pin point the exact reason for my suffering”

Or  

“I know homoeopathy does not work, BUT my uncle was cured of chronic headaches when he started taking those medicines”

Or

“I was able to pass the exam after the holy man blessed me”

Are you one of the people who has experienced stuff like the ones stated above?

You are a logical person and believe in scientific approach of double blinded study , but you cannot ignore what happened to you and the people you know  “personally” when they tried  occult and other scientifically disproven hocus pocus.

Anecdotal evidence is SOME evidence,and MUST count for something, correct?

Let’s discuss a popular possible “scam” .

I am really bad at picking stocks(Fact) , but I decide to start a stock TIP service where I tell people which stock to pick. This is how I could do it

Step 1: I buy a list of 1 lakh phone numbers .

For the purpose of this post, I will represent 1000 phone numbers(target users) with 1 sheep.

I know that Infosys is about to announce its quarterly result, and post every result the stock price either goes up or down significantly. I send half of my list[Part A] a message that “Infosys will rise , Buy as many shares as you can” and the other half [Part B] “Infosys will fall, sell sell sell”

Actual result: Infosys went up.

Step 2 : I discard the Part B of the list. I divide the remaining list in 2 parts and repeat the same process with Reliance stocks.

Step 3: I do the same process 3 more times for 3 different stocks, discarding the portion of the list that received a wrong prediction for each subsequent iteration.

At the end of these 5 iterations, I will have: 

1. 50,000 ppl who know I am just a bogus guy. The first prediction itself was wrong.
2. 25,000 will think my predictions are as good as flipping a coin, 50, 50
3. 12,500 will think i have some talent
4. 6,250 will think I am good.I got 3 in a row correct. Not a mean feat
5. 3,125 will think i am a genius , i got 4 out of 5 correct. They just had to follow my advice and make a lot of money.
6. And last 3,125 people will think I AM GOD OF FINANCE. I just predicted the FUTURE with 100% accuracy . There is NO WAY I could have done that with such consistency . I either have a LOT of insider information or I practice occult. They will believe anything I tell them.They will refer me to all their contacts, hold my words as dear as financial gospel.

All I have to do now is send a message to 4,5 and 6 to “Signup” with a low low fees of 1000 rs for getting more updates. Any guesses if people will sign up?

If you are part of group 6, would you NOT sign up? You could have made crores by just following my last 5 free advice, what is 1000 rs in front of that?

I just did some quick projection of how much the scammer can make (lots of assumption).

Now, the question is : Do I really know how to pick stocks?

And that is how ladies and gentlemen I can become anything I want.

I can tell you how to solve your marital problems using cow dung. Given enough solution seekers, I bet I can find at least some couples who will swear by my “cow dung therapy”.

This is one of the MANY “tricks” used for the spread of pseudoscience.

#DontBeSheep

I make a final prediction : Buy shares of a company called Suzlon. They will breach 18 in 2018.

If it works, send me some bitcoins ( ) , if it does not, well I already said I am bad at picking stocks ;). Deal?

//Update: Suzlon is still at 5 Rs…I failed in my prediction