Are you looking for Nirvana when you invest? Forget about it. It doesn't exist.

Let's start with two big losers that relied on financial data and ended up on the trash heap. First we have Long Term Capital. Founded by John Meriwether, Robert C. Merton, and Myron Scholes. They formed the largest hedge fund in the U.S. in the 1990s with an estimated 4.6 billion in capital. Merton and Scholes had won the Nobel Prize in economics for developing a pricing model for options called the "Black Scholes Model." Since both men had won the Nobel Prize, this should have been Nirvana. Now comes along the Russian financial crisis and Long Term Capital was on the wrong side of history. They took such a beating that the Federal Reserve had to help bail them out for a time until they went bust in 2000.

Continue reading How to avoid falling into the data mining trap

How to avoid falling into the data mining trap originally appeared on BloggingStocks on Mon, 10 Aug 2009 15:30:00 EST. Please see our terms for use of feeds.

I recently wrote a BloggingStocks post about Yahoo's recent deal with Zillow, an online real estate company. My take was that the deal was a sign that Yahoo is getting serious about mining its huge amount of data. The data, in fact, is getting much more interesting with such new social networking properties as Flickr, Del.icio.us and so on.

Well, this week, Yahoo hired Dr. Raghu Ramakrishnan, who will become a vice president and Yahoo research fellow. He is certainly a brain, having worked as a computer science professor at the University of Wisconsin and co-founded the Data Mining Institute. There is also a scholarly paper trail, with over 150 technical papers, as well as a definitive book on data mining, Database Management Systems.

Although, he does venture into the real world. In the late 1990s, for example, he co-founded a collaborative software company, called QUIQ.

You can get more detail on him at his web site.

Basically, his mandate will be to push "social search." Think of this as leveraging the "wisdom of crowds."

That is, as user-generated-content grows - with things like videos, blogging and even Yahoo Answers - search is ready for major change. True, Google's PageRank is solid, but it will probably not be the method for the long haul.

So, while Microsoft and Yahoo greatly lag Google in the search game, there is still hope. And, it probably lies in academics who are pioneering data mining.

Yahoo! mines for data originally appeared on BloggingStocks on Tue, 25 Jul 2006 18:11:00 EST. Please see our terms for use of feeds.

It seems fitting that -- in light of the National Security Agency's revelation that it is monitoring phone calls in the US -- Microsoft has hired Rakesh Agrawal, according to a recent story in News.com.  Agrawal is a thought leader in data mining and spent years at IBM developing his techniques. Now, he'll be working at Microsoft Search Labs.

Basically, data mining is a way to look at our personal information and provide companies with ways to sell us more stuff. It certainly a huge opportunity -- and there are terabytes and terabytes of our personal data sitting idle in corporate databases.  Might as well take advantage of this, right?

Agrawal has 45 patents and helped develop IBM's data mining product, Intelligent Miner.

Bill Gates definitely knows how to monetize technology -- and, no doubt, over the years, we're likely to see more data mining.  But, given this touches our personal information, might customers feel creeped-out with all this?  Maybe besides hiring these high-priest tech types, perhaps Microsoft should spend money on some privacy experts, as well?

Bill Gates wants you originally appeared on BloggingStocks on Tue, 16 May 2006 11:33:00 EST. Please see our terms for use of feeds.