Wisdom of Crowd: Your Financial Beacon
If you’re deep into your quest to achieve the Dot Com lifestyle, you’re most likely on the cusp of reinvesting a portion of your revenues back into your online business and taking a hard look at long-term financial planning for your future.
Odds are you’ve already learned the value of statistics to analyze your e-commerce results. Thus, you see the logic in determining an objective method to guide each major decision you make.
When it comes to beginning an investment portfolio, advice is not only abundant, it’s beyond diverse and often conflicting. You’ll clearly need to sort out your own preferences, but it’s advisable to establish a frame of reference to serve as a guide.
OK, so we have statistical confirmation of the obviosity that past results are no guarantee of future performance.
Incidentally, that guess-the-candy experiment has been duplicated everywhere. Here’s an example from the United Kingdom:
So, there must be something to the wisdom of crowds.
And there is. As usual with statistics, the key is how you model your data input.
You need to create a wise crowd:
- There must be a diversity of opinion;
- The individuals must be independent, contributing in their own way for their own reasons;
- There must be decentralization, ie- no one’s in charge to promote groupthink; and
- The data must be aggregated where something can be done with it.
If any one of those criteria is missing or corrupted, then the exercise is useless. This is clearly a method that requires simple input, such as guessing how many pieces of candy are in a jar.
Such a possibility does exist in the financial world:
In this way, the wisdom of crowd can assist in building a rational investment base, allowing you a relatively sound introduction into the financial world.