Is More Data Always Better?

There has been a discovery in the online marketing and data/statistics world in the last few years. We have had more websites, products and tools created online than we can possibly keep track of. The terms to describe this deluge of activity we have been hearing the most are “data overload” and “information overload” from both companies and consumers. This Google Magazine uses the term Data Obesity to describe this phenomenon.

They ask the question, why is more data always better?

I think the idea of “more data us better” is common from people who lived before the Internet was prevalent. We had to work hard to find data. Researching something meant going to a library and looking in a card catalog (or maybe something called Gopher) and then finding your way around the Dewey decimal system to find that book. And then sometimes they didn’t even have the book because it was checked out or possibly it was just filed wrong because nobody understood the Dewey decimal system.

On a related note recently we got invited to my cousin’s wedding in Santa Fe New Mexico. My dad promptly went to the library and checked out 3 books on Santa Fe and New Mexico. I cringed. He asked how to find out the flights to book something without a travel agent. I realized I have been traveling since 2000 this way and he stopped traveling about that time so he never has. I introduced him to Travelocity, it was mind blowing and a bit of data overload compared with the OAG book he used to use in the 80′s.

The point here is that finding data was really difficult. People had control over its distribution because it was in print. When it became more freely accessible due to Google and other companies efforts we assumed this would be good, because people could remember where to find it and use it whenever we wanted. We never thought it would get this big so fast. Now travel sites are overwhelming, they have too many choices and there are too many of them trying to get you to opt into something you don’t want while being over charged for bringing a suitcase on a flight. This is just one example of how data has gone exponential so quickly.

Others of us have come to a data overload conclusion when they have 200 emails in several in-boxes, 1000+ rss reader posts from feeds waiting, several work projects, 500+ Facebook wall posts in their feed and hundreds of tweets that have gone un-read. This is among a climate where you have to follow-up with projects 5-10 times to get things done, post blogs/tweets/FB status updates daily to keep on people’s radar, empty the DVR so it doesn’t get overloaded and auto delete something you really wanted, listen to the radio on the way to work just in case something big happens and still find time to scoop the litter box before it gets full and the cats poop on the floor.

And the real purpose in all those tweets/FB posts and feeds is that you business changes yearly and if you don’t know about the latest trend and some real insights about it before your boss asks about it, you won’t have a job for all that long. (in digital marketing)

Having data overload be a “good” problem to have from some people’s perspective (as in that it is growth oriented). The democratization of publishing combined with tracking methodology and databases have all contributed to this problem, giving everyone a voice, a potential following of readers, a data trail to analyze and method to say something important online 24/7/365.  And then we have an even bigger problem of processing what is being said, figuring out if it is important or not and sharing/processing/saving it in some way if it is. Acting on that data is way down the line and many of us don’t even get there.

And this isn’t even the big problem with data overload. Where will we store it all? Why do tweets disappear from search so quickly? Because there are millions of them and the failwhale is full. According to the ThinkQuarterly UK, there are 800 Exabytes of data/information created every two days. It took humans from the beginning of civilization until 2003 to create the first 800 Exabytes, and we’re on a roll now.

Where does all this seemingly random data go? How will we know what it says without having to go into a database table and read specific field information? Where are the software tools to manage all this and still give humans the ability to customize the out put in ways that match the behavior or business purposes that we really need? Does any of this stuff ever get deleted?

These are all huge questions we have to answer as more people publish, share, create, track and do business online. We also have to weigh the possibilities of sharing data openly and locking it behind walls as well as how will people comprehensively find what they need when they want to as well as gauge the validity/accuracy of the information presented?

I’m betting on paid services for personal and business data management/archiving & Analysis tools. We will pay for good analysis, good data access & processing and good reliability/backups when we feel the pain of missing good insight, losing good data and just too much happening. Both personally and professionally. But unless you know how to work with SAP, SPSS, SQL, Oracle or a bunch of other systems data management is largely out of your control at this point. They are the librarians of our digital data and they need to find a workable way to Dewey decimal system it back into order and allow us to use it as humans need to.

Can ordinary people manage the risk in the stock market for their retirement?

I am beginning to think there is no way an average American can invest in the market and make any money for their retirement in a 401K. I was reading this morning that 5 and 10 year returns in the portfolios of most mutual funds are negative now when they calculated in the huge losses from recessions in 2001 and 2008 and the beginning of 2009. (Q1 hasn’t been kind) 

As an investor (for my 401K) I look at that and say: yuck! Why would I put my money in something that has no long term value?

My fiance sent me this article saying that now 20 and 30 years are the benchmarks for best overall performance in mutual funds and stocks in the market. Yikes! 20-30 years? Who has that much time before retirement? Who can invest for that long anyway?

When you consider that most people’s salary starts dropping when they reach their 50′s (because employers don’t value old employees and can’t spend time/money updating their skills) you really have 25 years max to work with as far as investments for retirement.

You start your first real paying job with a 401K at age 25 and you may not be fully employable by age 50 although you will likely live to the age of 80 or 90.  There’s your 25 years to save and invest for 30-50 years of retirement.

I also think there is something else going on here affecting the 20-30 year market profit numbers. The US Markets benefited from a long term technology/innovation and growth curve from WWII to the 1980s. Personally, I think that was a one time deal and we will never see that kind of long term prosperity again.

Why? 1. Because we don’t understand enough about technology to innovate on that level again to create that much growth. 2. Because the US has higher paid workers than anywhere else in the world and everything gets manufactured and produced (and serviced) somewhere else. 3. Because we’re too complacent and have too much entitlement as a country of workers. Work creates wealth, not shell games with securities.

That brings up another point: We’ve been playing a shell game with our economy since the 1980′s. De-regulate, re-regulate, stimulus, fix, fund, trade, outsource, sell, leverage, whatever… It’s all a shell game to us worker bees and the internet has been the only significant improvement in technology to create new industries and jobs in the last 20 years. We need more than that to survive and prosper as a nation and a world.

I don’t know about you but I can’t stand to take that much risk with my money. I have some in a 401K but mostly my retirement is locked in a 5 year CD IRA at 5.25% that was a promotion this fall when banks wanted more cash reserves. I changed companies in 2006 and rolled over the old 401K to a bank in 2007 because I knew the 10 year recession was coming soon and I didn’t want to risk timing it.

There will always be people who game the market and come out ahead, but those of us without finance degrees, huge money to invest in undervalued markets or inside scoops will never really profit on the whole. Many of us will get out exactly what we put in and maybe less considering our lack of  investment prowess. So, in that level of risky why not just put it in the bank? Positive 3-5% sounds a lot better than negative 40%.

I hate the inflation argument that says that 3-5% isn’t enough to make money after inflation. Guess what? Inflation has been very low and inflation doesn’t stop when you have negative returns either. I’d rather have some money dependably than none at all when prices are higher. 

You may be asking why I want more innovation and less investment in the market? Doesn’t investment in the market lead to more innovation?

NO. Most of the mutual finds and stocks you can buy that are highly rated are in huge old (one trick pony) risk averse companies that have already peaked and can’t figure out how to do anything new. They sell shares to raise cash and then have old people make decisions like the old days. Venture Capital,  new small businesses and Universities are the place where innovation happens. If I could invest in those, I would. But then again I don’t have millions of dollars and apparently I won’t any time soon.

What are the best proven ways to fund your retirement and create wealth then?

1. Have a side job for extra income you can save (part-time weekends or evenings a few nights a week)

2. Own rental property for extra income (you need to live near it for this to work)

3. Have fewer kids if you’re contemplating having a family (ok we don’t always control this, and we love kids, but nobody is going to debate that they are expensive) 

4. Own a smaller home (smaller mortgage = smaller amount in interest paid (lost) to the bank)

5. Don’t go into debt on credit cards or car loans (hello! 25% interest, MONTHLY! on some cards)

6. Live frugally generally, keep your cars 10 years, don’t buy new clothes every month and don’t buy big ticket items like TVs and Computers every few years. Spread out the expenses over the long term.

7. Share what you have with others. Seriously, knowledge, help with projects, donating time and donating items you no longer need, as well as hand me downs between families help kids and neighbors live better within their means and help the community live better too.

8. Take care of your health. Eat less junk, lower fat, lower salt, lower carbs. Exercise daily. Take vitamins. Don’t work in an industry that has a side effect of cancer. Visit the doctor regularly and if something comes up treat it early, it will cost so much less in the long run. Heath issues start in your 30′s and get more frequent in the 40′s, 50′s and 60′s. Expect to pay more every decade for health costs in your life/budget.

These are all real tactical changes we can make to save more money monthy and yearly that will get better returns than the stock market and help prepare for inflation. What else do you think can help?