Small Data For Big Wins

Mr. Black Swan himself Nassim Taleb had a Wired piece titled ‘Beware the Big Errors of Big Data‘ which is great. Please read it. The gist:

WE’RE MORE FOOLED by noise than ever before, and it’s because of a nasty phenomenon called “big data.” With big data, researchers have brought cherry-picking to an industrial level.

Modernity provides too many variables, but too little data per variable. So the spurious relationships grow much, much faster than real information.

In other words: Big data may mean more information, but it also means more false information.

The Farnam Street blog, which is excellent, covers the topic above and says you can deal with the big data problem by…. 1.focusing on your niche and 2. focusing on how the world works.

I have written about the power of small data for years on this blog. Here are my favorites posts on the subject.

Most traders and investors get bogged down with too many variables and too much information which leads to asking too many people for opinions and most likely too many positions…and on and on.

I have had huge wins using small data…the actual closing price of stocks, my eyes, my ears and following the right people.

Have a great weekend.

Also published on Medium.