Big Data or Small Data – Economists and Analysts Stink With Both…and it will get Worse with Social Data

I was reading an article by Michael Moritz late last night and I liked it. Not a dumb guy :).

Here it is. In Summary:

1. Weather data rocks…pay attention.

2. Economists are asshats in general and yutz’s for even trying to make sense of the data.

3. Ratings Agencies are criminal organizations.

4. Earthquake predictors have a bad rap.

In essence, big data, has it’s uses. Woot.

If you are an investor, I dont think it means much or you should listen (99 percent of you).

I live on small data.

In fact, I have been trying to ‘live small’ since moving to Coronado in 2010.

They say that price never lies, but it does while it’s moving. Prices in the markets are a culmination of big data I suppose… and that is why it lies while it’s moving.

At the end of the day we are once again left with small data in closing prices. Cost you nothing. Same with volume. I trust volume in the markets less and less each day as volume gets spread around the world and overseas and ‘off’ market.

Today, we have a new dimension in my world of price and volume…social data. I can tap into it with free tools. Stocktwits has such a tight group of people from all over the world that scour the market and share, that our relatively small group of people can spot trending tickers and markets. Costs you nothing. Tap into it. Of course there is a learning curve.

The hedge funds and banks have been too busy with Greece, Spain, their own leverage, rules, layoffs and greed that ‘social data’ is not yet mainstream in the financial world. The banks and big funds will eventually rush into this space and crunch away on the ‘social’ big data because – everyone is holding their hands connected on Facebook. There must be ‘signal’ in the noise. A few will find it of course and start hedge funds. A few will just say they have it and sell it to hedge funds and individual investors.

Stay away from big in today’s financial world. It has not worked in the past unless you were the house. The house got bigger after 2008, but the rest of us got smaller. Embrace it.

5 comments

  1. William Mougayar says:

    Big data is not for the faint of heart & it’s not for the average smart guy either. Actually big data gives more room for false interpretations. 

    Like you, I like social data & am getting better at interpreting it and using it. In the StockTwits context, social data makes things like sentiment that were previously almost invisible, totally visible for any one. That’s part of the magic. 

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