Lies, Damn Lies and Statistics

  

It was Mark Twain who popularised it, but the original authorship of the oft quoted phrase “lies, damn lies and statistics” is widely contested. One to whom it is frequently attributed is Benjamin Disraeli. A distinguished conservative politician and literary figure, Disraeli’s business ventures are deservedly less celebrated.

His speculative investments in South American mining companies in the early nineteenth century proved calamitous and almost ruined him. One wonders whether, had he a more considered view of the power of information than is implied by the phrase with which he is sometimes associated, he may have avoided the pitfalls of reckless investment.

While the world, and particularly the ethereal world, is awash with data (and indeed statistics), it is alarming how infrequently that data is converted to useful information. At a time when data is generated and captured at an unprecedented rate and indeed has become inordinately accessible, it is ironic that we remain so beholden to the spinmeisters and their political masters. The power of information has never been more readily, tantalisingly, at our fingertips but somehow we don’t reach out and grasp it.

At Silne we have a healthy disregard for what we call information asymmetries. In equity markets information asymmetries are said to be removed through the trading activities of arbitrageurs. When I trade on the basis of closely held information I essentially expose that information to the world. In the meantime of course, I make money. Information asymmetries then confer power on the holder of information, or serve to diminish the interests of those without access to it. That’s not fair and we don’t like it.

We define information asymmetries rather broadly … information is available but is not being used; you have information but I don’t; information exists but I don’t know it does. Finding relevant, predictive data, sifting and analysing it, and using it to solve problems and improve decision making  is not easy but it can be a route to the truth, not the damn lies which Disraeli so lamented.

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