FYI: The main reason we employ a tactical investment approach alongside a balanced, strategic approach for our clients is that life is not lived in 20 year increments. We live in increments of days and weeks in real life, and when something is causing us pain, we feel it acutely, in the minutes and hours during which we experience it.
Regards,
Ted
http://thereformedbroker.com/2018/06/10/you-have-to-live-through-the-statistics/
Comments
Statistics provide useful tools and insights to help the investment decision process. But statistics can be wrong or wrongfully applied.
Here is a repeat of a paragraph that I submitted in an earlier post: "We all use data, but please be careful. Benjamin Disraeli noted that "There are three kinds of lies: lies, damned lies, and statistics". Also consider Mark Twain's witty rejoinder: "It is easy to lie with statistics, but it is easier to lie without them". Never an easy answer.
So statistics can be a double edged sword. Statistics can yield a hugely distorted picture of the true situation, especially flawed statistics. A poor sampling procedure of the complete data base is just one of many ways that statistics can be wrong. Also, the outfit that generates the statistic might well be a vested interest with a strong bias to conclude a predetermined way.
So, like in all instances, buyer beware. Nothing new here.
Best Regards
What is the difference between Data and Statistics?
In regular conversation, both words are often used interchangeably. In the world of libraries, academia, and research there is an important distinction between data and statistics. Data is the raw information from which statistics are created. Put in the reverse, statistics provide an interpretation and summary of data.
>>>So, whether it is the egg first or the chicken; I don't care. Data and statistics feed one another, eh?
And if I were not able to be careful, I'd better have my money parked in CD's and pay the insurance agent the big money for an annuity.
There have been more than enough times over many years when asked about investments, that the asking folks had not interest in learning anything about the broad terms and some of the driving forces for investments. I suggested they find a low cost fee only adviser from recommendations that may be available from other they know and trust.
@MJG , you are well aware of the wonderful amount of useful data/statistics available today, versus the olden times. These have allowed our household to become more well informed. Past this, the data/statistics are of no use to the folks who choose not to continue to educate themselves in this area; and in particular, those who don't know themselves well enough for proper decisions.
Regards,
Catch
"Statistics are supposed to make something easier to understand but when used in a misleading fashion can trick the casual observer into believing something other than what the data shows."
That's not me talking. It's the opening statement from the following Wikipedia article:
https://en.m.wikipedia.org/wiki/Misuse_of_statistics
Designing a good statistical test and/or interpretating a well designed test can be a difficult challenge. Caution is always warranted. Please take time to read the referenced article. Thanks.
It is true that I know a little about statistics, but I am definitely not an expert. What little I do think I know has helped me and my wife in making investment decisions.
Best Wishes
After posting, I continued to think about the subject. I recalled that I read a superior book on the topic by Russo and Schoemaaker. The title of the book is "Decision Traps". I own a copy. Here is a Link to an excellent summary of the book:
http://http-server.carleton.ca/~aramirez/4406/Reviews/TPha
It's only a few pages long and does a good job at extracting the meaningful conclusions from Russo and Schoemaker's work. It's worth the effort. Enjoy!
Yes, many items may be twisted for who or whatever purpose.
How many folks ask proper questions about home or auto insurance policies? How many read important contracts?
There are those who are dangerous with a "blade screwdriver".
The problem is when Statistics is used for PREDICTING THE FUTURE. Then it becomes BULLS**T. I don't need statistics to tell me a narcissist will continue his behavior, for instance. People use statistics to sound sophisticated to prove/predict things for which it was not really needed. Then, they extrapolate their "superior intellect" to inform us they can predict anything.
Anyone want to buy weather forecasting model for when monsoon will begin in various Asian countries? I am selling. I used Artificial Intelligence to teach my Machine to Learn how to do that because I couldn't teach Humans with my Natural Intelligence. Mostly because I was trying to do that for free. Free advice is never good, Paid advice is good. Check.
I agreed with 100 % of your insightful submittal until your last few observations. I do not believe that "Free advice is never good". The "never" is far too all inclusive.
Certainly free advice is sometimes wrong, but it is also sometimes spot on-target. Surely a good life rule is that you get what you pay for. But exceptions exist. Being cautious is always a good practice, even when you pay for advice. Experts often overstate their qualifications, especially in the mathematics arena. Here is a Link to an article that identifies 6 red flags that suggest bad advice is forthcomng:
https://www.fastcompany.com/40438756/these-are-the-six-red-flags-that-youre-getting-bad-advice
Commonsense helps to defend against bad advice even on these pages.
Best Wishes
Free Advice is...FREE. People don't appreciate it. After all they have been conditioned to believe there is no such thing as a "free lunch". So instead they will pay for EXPERT ANALysis with fancy powerpoints and statistics thrown in, saying nothing different than what the free advice said.
Statistics defining and combined with other Bulls***, makes for a certain area of what is justified as Marketing, Lobbying, Evangelizing, Advocating. I admit it creates lots of jobs, however it still smells. I only rant about it because I get sucked up in it sometimes.