Saturday, December 18, 2004

Which View is Correct?

Looking at the Dow Jones Industrial Average through the lens of these different view can be confusing at first. Which view is correct?  Why do they look so different?  What are they trying to tell me?

This is the time series visual equivalent of the blind men and the elephant story.  Each view tell a different part of the story, literally from a different view point.  Each view is only part of "THE TRUTH" of the matter.  It's up to us to use these visualizations of behavior over time, to help craft a story that is consistent with each different viewpoint and helps tie them together.

Different observers will bring different experience and knowledge about other parts of the world to the table when reviewing these pictures and will as a result craft different stories.

The beauty of the visualized time series approach is that it opens up the possibility for us to sit down together, to view the series together, to share our explanations and stories with each other, to learn from one another.  As this process unfolds as we sit side by side in either physical space or virtual space, the doors are open to collaboration.  The opportunities are there for us to develop a new and better stories, to bring new facts and time series into the picture, and to develop new ground for common understanding and common action.

Which view is correct?  They all are.  It's up to us to fit them together.

Where do we go from here?  Here's a beginning

The Dow is only a single measure of financial behavior.  Even with only a single metric, we have so many choices.

1) we see we can look at it's raw value as reported on the nightly news completely out of context of its life history.

2) we can look at it's behavior over 5 years or 20 years, or for that matter for 1 year, for 1 month, for 1 week, for 1 day, or for 1 hour.  Each of these zoomed in or zoomed out views will give us perspective about what's happening.

3) we can normalize its value in terms of some other metric such as the value of the dollar vs. the euro. 

4) we could also normalize it terms of inflation as we commonly do with some other metrics such as Gross Domestic Product or Average wages

5) And we can bring into play one or two or a hundred other important measures of financial behavior such as GDP, Wages, Unemployment, interest rates, trade balances, national debt, other currencies vs. the dollar.  And each of these can have its own zoomed or unzoomed values, and its own variants and formulaic calculations. 

Then our job is to sit with the question we have in mind, to wander through a subset of the combinatoric number of pictures we might view, to construct and share our stories with others who are interested in the same question and who are willing to examine the corpus of data.  

The possibility for this kind of TimeLine Collaboration, yet another "TLC", is the thesis of this Blog site. 

In the financial sphere, especially in the stock market and other financial markets, the ability for ordinary citizens to wander the visualized time series space of possibilities is quite far advanced.   We can learn a lot by seeing what common web sites such as offer to those interested in the time series behavior of their favorite stocks. 

The value of time series visualization and collaboration is not restricted to the stock market.  In any areas of our lives that are important to us, there are essential measures that change over time.  Making these measures and their changing ebb and flow readily accessible and visible to ordinary citizens can make a huge difference in our ability to control our own destiny and to shape the future of our dreams.

The challenge for us:  Once we move outside the stock market arena, the ability for ordinary people to have access to and to visualize the important time series that exert powerful influences on their lives is reduced almost to zero. 

One of the on-going missions of this Blog is radically alter the landscape, to make more and more of the vital time series available to more and more people, to make these series available in a readily reusable and visual form, and to foster collaboration, shared story telling, discussion, learning, and all the fruits that can follow from opening our eyes to the time series (mostly invisible) that are flowing all around us at every moment of our lives

Note:  The source of the recent charts of the Dow Jones averages, currency markets and the like is TradeStation.

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