From the CFA Institute's Enterprising Investor blog:
Thanks to the constant barrage of data associated with the information age, many claim we are living in the “era of big data.”Also at the CFA Institute:
Nate Silver, author of The Signal and The Noise and founder and editor-in-chief of FiveThirtyEight, explains how to differentiate between “signal” and “noise,” and discusses the danger of false signals, in a recent Take 15 interview with Lauren Foster.
“I think the challenge people don’t realize is that when you have more and more data, in some ways that makes it harder,” Silver says. “Now you have to choose which data you’re looking at, what you took to be the signal versus the noise. What I think we need is a series of best practices . . . We need more experience working with this data.”
Silver notes the difficulty of defining data. “Everything is data in a sense — anytime you’re trying to go from an anecdotal example to generalize, then you at some point have to use a common language,” he says. Given this broad definition, Silver cites the importance of classifying data before utilizing it for forecasting. “Data sets that are unstructured are very raw,” he says. “Before you get into analysis and prediction, organization is important.”
As for why signals and noise are easily confused, Silver looks to brain development....MORE
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Is this thing on?
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-Buddha
"I was dreaming when I wrote this, forgive me if it goes astray..."