# How much information is enough to make an effective decision?



## DeepState (16 December 2014)

Pushing recent news about enhanced interrogation techniques and their illegal use, this from the CIA.

https://www.cia.gov/library/center-...psychology-of-intelligence-analysis/art8.html


----------



## TPI (18 December 2014)

RY, interesting post. Would you take this to apply to stock selection too?


----------



## DeepState (19 December 2014)

I'm not really too sure.  The chart shown is from a study done by a guy called Slovic in an analysis of book-makers.  I believe that things like past form, barrier draw, handicap weight...were the pieces of information given up front with progressively less influential things given later.

For stocks, I guess we need to define what we mean by a piece of information.  I would suggest that a small number of key decision drivers informs most of the investment call in terms of accuracy and the rest is just data mining.  It might take a lot of data to come to a view on these key drivers though. Stocks are not similar in the way that horses are.  A piece of information relevant to the assessment of one situation for one stock may be irrelevant for another.  Handicap weight is important for all horses, so is favoured track position.

For me, the underlying premise about not overcomplicating the key drivers is applicable.  But that does not necessarily flow on to the number of pieces of data required to coalesce a view into those drivers.

What do you think?


----------



## shouldaindex (22 December 2014)

Perhaps it illustrates that there are inherent odds.

And it is a human fallacy that we can control them.


----------



## TPI (25 December 2014)

Agree with not over-complicating things and the underlying premise. I'm not so sure about the amount of data it necessarily takes to get to this point. My approach by necessity and time constraints is relying on getting to this point quickly and with less reading, but I haven't been don't it long enough to be confident that it will achieve acceptable outcomes. Time and experience will tell!


----------

