The new technology of big data tells us how information is power. The more data and information we possess, the more power we have. However, there is another source of power that is overlooked. It is derived from our own experiences. In terms of data, it is small and a singular data point. Yet, the information may be just as valuable if you know how to use it.
– Oct. 2018
Take any topic of interest, and you can find some statistic or survey or study to show what the current state is. For example, recent poll of likely voters show that there is a blue wave coming in the upcoming mid-term election. Polls are not as reliable as people thinks. It is a sample of a limited number of people. The polls are taken by professionals who study the demographics and look at history of past elections and many other factors to reach an educated guess. As we know from the 2016 election, polls can be wrong at times.
As consumers, we are relying on news, and polls, and scientists and government officials to tell us what is going on in our environment. We do not have the luxury to perform independent studies. We have to trust those in the media and the elected officials and bureaucrats on certain data or facts. For example, the Department of Labor Statistics calculate the CPI monthly. This number is the official inflation rate. It tracks a number of consumer goods and measure the average price of these items over time. If the price goes up, it indicates inflation and if it goes down, it is deflation. It does vary from location to location and also subject to changes in the mix of products.
This number is important in many ways and one of which is the determination of social security benefits. Every year, the benefits is adjusted upwards by the CPI factor. This means a lot to seniors who are mostly depended on their social security checks to live.
A person living in a city like NYC has many expenses such as housing, food, transportation, energy and recreation. It is one thing to be told the inflation rate was 2.8% and another to see the price of egg jump from $2.99 to 3.99 a dozen. This is the personal experience I was talking about. The same can be said about the price of gasoline or the subway fare or the price of a burger at McDonalds.
Our experiences may be vastly different than what is reported. Which should we believe? Which should we rely on to make decisions.
Another example is the unemployment rate. Recent report is that the official UE3 number is 3.9% nationwide. That seems like a very good number. However, if you live in a mining town of PA, the local unemployment may be as high as 25%. Also, your experience may be you know your neighbor was recently laid off. A recent college graduate are having a hard time finding a full time job. Your teenager is having hard time getting P/T work at the local fast food joint. You go to the local mall and see empty stores. All these data points may paint a very different picture of unemployment numbers.
The Power of Observation
A few years ago, I heard of a new burger place called Shake Shack. It was well received by customers and people waited on long lines to eat there. Many stores popped up around the NYC area. Then, the company went public in an IPO offering. The stock price went up and up. Having personally tasted one of their burgers, I can see why it is so popular. It tastes different than other fast food burgers. Being a smart investor, I decided to invest in the company. It has done well in the year I bought it.
I made this decision based on my own observation and experience. There are many companies going IPO. Why was this one chosen? I saw the potential based on my own first hand knowledge.
State of Our Economy…
Our economy is currently going through a boom cycle. Stocks are reaching new highs, unemployment is down, wages are inching upwards. Everywhere you look, there seems to be construction underway. Restaurants are busy and full of customers. Tourists are filling our city buses. Shoppers are carrying packages as they stroll through outlet malls. These are all data points.
The GDP was reported to be 4.2% last quarter. Even without this confirmation, most people know when things are looking up. More congestion on roads and highways and airports. More people eating out…Happy days are here again.
Getting back to my original point about the blue wave. Does it seem logical or reasonable that the Democratic party is looking to gain seats in the hall of Congress in such a climate? In a time of economic properity, the party out of power hoping to regain power. After 8 years of President Obama, in two short years of Republican control under President Trump, things have finally turn around and taking off.
What do you think?