Becoming Friends With Statistics

Welcome to the world of statistics, Investopedia define Statistics - as the study and manipulation of data, including ways to gather, review, analyse, and draw conclusions from data. 

The various statistics that we see on the business reports, and mostly splashed on the front pages of business newspapers are nothing more than titbits of information about our economy. 

Statistics when used properly can help us all including investors to make more informed decisions as consumers, workers and taxpayer.

The reasons why statistics are so important in our lives are as follows: 

• Economic statistics keep track of the economy (explains whether the economy is in an expansion, a recession or a sideways)
• To provide the government with information on what sort of policies can be implemented to fix whatever problem the economy is facing.
• To provide consumers with information that can be used to make informed market decisions (When to buy/sell a house or car)

 It is crucial that we consider the source of the information – we must view them with a sceptical eye. 

💡NB! Statistics should be viewed as indicators, and not as sacrosanct.

Economic statistics are helpful if used properly, but can be deadly if misused [a lot of people distort statistics in pursuit of a political agenda] Be wary.

As investors we are to be blamed if we do not find solid guidance from stock exchange gurus. The truth is all the experts are competing in ruthlessly changing and volatile stock markets around the world. This often leads to advisors not telling investors enough about how they achieve their results [in a competitive world, after all they could be giving away secrets]

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