The Signal and the Noise

Before we demand more of our data, we need to demand more of ourselves.

80-20 rule.

The greatest 20% have to work harder than most people. It is way harder to make progress to in increase from 80 to above, than from 0 to 80.We see the top 20%, which is the tip of the iceburg supported by a vast amount of effort beneath the water level.

Nate Silver recommended start where the water level is low to build up and have an edge.

The poker game for him initially, was easy. When the poker bubble broke, the weak players were gone. Thus, “the water level has risen, and some of the sharks turned into suckers.”

As an emperical matter, success is a result of hard work and luck, in other words a combination of signal and noise. E.g. play well and win, play well and lose, play badly and lose, and play badly and win. Therefore, dont take success for granted; focus as much as I can on self-improvement.

The Signal and the Noise by Blinkist (Blinkist)

- 您在位置 #39-40的标注 | 添加于 2019年4月10日星期三 上午8:55:00

feedback loops. When businesses have increased sales, it spurs them to hire more workers. This then gives those workers more disposable income, which increases consumption and further boosts sales.

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The Signal and the Noise by Blinkist (Blinkist)

- 您在位置 #49-50的标注 | 添加于 2019年4月10日星期三 上午8:58:03

Statistics-based forecasting alone is not enough – human analysis is still needed.

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The Signal and the Noise by Blinkist (Blinkist)

- 您在位置 #59-61的标注 | 添加于 2019年4月10日星期三 上午9:01:21

It is therefore crucial that, even if we use technology to wade through huge masses of data, there is still a human there to do the analysis and consider whether there is plausible causality.

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The Signal and the Noise by Blinkist (Blinkist)

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in fact, all it does is increase the amount of useless information – or noise – which in turn makes it harder to spot useful information – or the signal – hidden within.

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The Signal and the Noise by Blinkist (Blinkist)

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collateralized debt obligations (CDOs), which consisted of a bundle of mortgage debts. The idea was that, as homeowners made payments on their mortgages, investors who held CDOs would earn profits.

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The Signal and the Noise by Blinkist (Blinkist)

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history shows that recessions caused by a financial crash usually make unemployment rates stay high for four to six years

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The Signal and the Noise by Blinkist (Blinkist)

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one fund did well in a particular year, it was no more likely than the others to beat its competition in the following year.

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The Signal and the Noise by Blinkist (Blinkist)

- 您在位置 #142-143的标注 | 添加于 2019年4月15日星期一 上午9:09:18

price/earnings, or P/E ratio, of stocks: the market price per share divided by the total annual earnings of the company per share.

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The Signal and the Noise by Blinkist (Blinkist)

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In the long run, the P/E ratio of the entire market tends to be around 15.

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The Signal and the Noise by Blinkist (Blinkist)

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even when they see a bubble is forming, they keep buying and reaping bonuses as the market soars. When the crash does eventually happen, they’ll only have lost their company’s and their clients money, not their own.

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The Signal and the Noise by Blinkist (Blinkist)

- 您在位置 #150-151的标注 | 添加于 2019年4月15日星期一 上午9:11:13

In fact, after the last three big crashes on Wall Street, only about 20 percent of staff lost their jobs,

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The Signal and the Noise by Blinkist (Blinkist)

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Because data indicates that such attacks are actually to be expected: the frequency and severity of terrorist attacks follows a pattern known as Clauset’s curve. Basically, when attacks are grouped together based on how many fatalities they caused and then their frequency is plotted, we see a very predictable double-logarithmic curve where attacks become less frequent the more devastating they are.

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The Signal and the Noise by Blinkist (Blinkist)

- 您在位置 #175-179的标注 | 添加于 2019年4月15日星期一 上午9:16:49

Because data indicates that such attacks are actually to be expected: the frequency and severity of terrorist attacks follows a pattern known as Clauset’s curve. Basically, when attacks are grouped together based on how many fatalities they caused and then their frequency is plotted, we see a very predictable double-logarithmic curve where attacks become less frequent the more devastating they are. Clauset’s curve clearly indicates that an attack on the 9/11 scale happens roughly once every eighty years, so the government should have been open to this possibility.

2014-12-01 10:38:55 Uncertainty, on the other hand, is risk that is hard to measure.

2014-12-01 10:39:51 The alchemy that the ratings agencies performed was to spin uncertainty into what looked and felt like risk. They took highly novel securities, subject to an enormous amount of systemic uncertainty, and claimed the ability to quantify just how risky they were

2014-12-02 17:50:34 Instead of physics or biology, however, electoral forecasting resembles something like poker: we can observe our opponent’s behavior and pick up a few clues, but we can’t see his cards. Making the most of that

2014-12-02 17:50:38 limited information requires a willingness to update one’s forecast as newer and better information becomes available. It is the alternative—failing to change our forecast because we risk embarrassment by doing so—that reveals a lack of courage.

2014-12-05 08:26:34 A prediction is a definitive and specific statement about when and where an earthquake will strike: a major earthquake will hit Kyoto, Japan, on June 28

2014-12-05 08:26:42 Whereas a forecast is a probabilistic statement, usually over a longer time scale: there is a 60 percent chance of an earthquake in Southern California over the next thirty years.

2014-12-07 11:15:12 . I suspect that epidemiologists, and others in the medical community, understand this because of their adherence to the Hippocratic oath. Primum non nocere: First, do no harm.

2014-12-07 12:34:03 So Voulgaris is not just looking for patterns. Finding

2014-12-07 12:34:15 patterns is easy in any kind of data-rich environment; that’s what mediocre gamblers do. The key is in determining whether the patterns represent noise or signal.

2014-12-09 10:44:01 What you see is a graph that consists of effort on one axis and accuracy on the other. You could label the axes differently—for instance, experience on the one hand and skill on the other. But the same general idea holds. By effort or experience I mean the amount of money, time, or critical thinking that you are willing to devote toward a predictive problem. By accuracy or skill I mean how reliable the predictions will prove to be in the real world.

2014-12-10 09:51:50 the worst forecaster takes the “prize.” This is known as the “winner’s curse.”

2014-12-11 00:45:12 [T]here are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—there are things we do

2014-12-11 00:45:19 not know we don’t know.—Donald Rumsfeld21