Is it the economy or the data?

1. How reliable the data and the resources from where it is collected is are?

2. Do we really interpret the data in the way that is right and useful?

These are the sources covering data for years and innovating themselves from time and again. If the instititutions like World Bank, IMF, DOE etc can not be trusted for providing us the correct data then I think the analyst who do the job of analysing this data is in serious trouble. Because there is no other big source of data. I strictly dont think that there is any problem with reporting as it is going on for years. Right or wrong thats not our job and we dont have definitive figures to support our contradictions to this data.

Now moving the next part: Interpretation: Accept the fact that this is what we have and now look into it with open neutral heart. Good analysts never take a biased view and they analyse data and then come up with their view points. Sometimes over interpretation brings in so much variables and confusion that one tends to come up with view point far away from reality.

Examples:-

Some prominent research house (I cant name it for the reason of non-disclosures etc, you all know) came up with few numbers that China is going to be the biggest disappointment. They are inflating their growth numbers, their electricity production is declining which says they are not in good health. Agreed, but a common sense is, a country which is going to spend $600 billion on its infrastructure (approx. 22% of its GDP), can it be such a big disappointment. If some one goes to China, you feel the development on ground levels. Im not saying I favor China's numbers, Im just saying that we need to look at macro level and on both sides of bar.

Example 2:- US dollar is losing its sheen, because its lot more volatile in recent years, there are few other strong world powers emerging who want to end the dollar's monopoly as Currency of trade, so dollar will weaken and its days are over. I heard one very famous investor saying:- I cant invest in US stocks even if there are few very good stocks, just because they are in currency that have only one future: heading south. So is everything right with other currencies, take Euro's example, strong performance over the years but now high growth countries and cheap labour countries in Euro zone are facing the heat. There inflation in higher then more developed Europe and currency does not adjust to it (as it is one) thus on comparative basis they are not growing at the same rate of their GDP growth as the utility of the people is tied to factors that are beyond the control of their country.

Foreclosure data is US:- Are we at the bottom, just because housing sales rose in last month and prices of houses are improving. Huh! Another factor is there are still people who just stopped paying their installments and it will take another year for them to go through the process of foreclosure and equal time to bank to writeoff.

So to conclude, data sources are same and nothing much will change in terms of the resources of data. It is very complex structure and can not be rivaled. Today due to online media being at its strongest in its history, every analysis reaches everybody interested in it within no time. Its we as a user of data who need to set our limits and analyse the data with calm, open eyes and without bias. Rumor mills are also important part of society, because without them intelligent people wont get their due and smart money will not get chance to be parked at the place where it deserves to be.

Regards

Harman