The Digital Skeptic: Investors Would Do Well to Get Real, Not Digital

RIO DEI FRARI, VENICE, Italy ( TheStreet) -- Sure, it's a bummer of a bull market, but it's a bull nonetheless. Time to buy a stock and hold it. That makes it time to check in with my favorite expert in what's of real value over time: Mr. Gianni Berengo Gardin.

Gardin is not hard to find. There's no need to go overboard as I did and blow $110 on a water limo to get down a chilly, cramped Venetian canal to get the man to autograph his latest book of photographs. Just search up the man and you'll find, geez, hundreds of carefully crafted, mostly black-and-white photographs.

It's a body of work that gets investors in direct touch with what really holds value over time: reality.

"His greatness lies in his simplicity," writes photo critic Denis Curti in the intro to Stories of a Photographer, Gardin's latest collection. "Or rather, his ability to render the complexity of the world comprehensible."

There's also the fact that Gardin is loath to adopt 21st century digital imaging tools.

"All photographs in the exposition and catalogue are real photographs that have not been rectified, modified or fabricated in the computer," is what's printed in bold near his photos.

Instead, Gardin's genius lies in working with traditional silver emulsion-on-negative film, loaded into mechanical cameras. Gardin finds the right subject, sets his gear up in the right spot and waits for the right time to take the right image.

A Grand Canal-level commitment to reality makes him an unlikely -- yet critical -- investor touchstone. Because if long-term value is what you seek, relying on virtual numerical analysis in this overloaded, by-the-numbers era turns ugly fast.

The numbers are not what they used to be
What's appalling is how even a cursory glance at the basic techniques of today's "Big Data" numerical financial analysis paper over deep and intractable issues when considering long-term investments.

Among many examples of the dead-end canals lurking for those picking stocks purely by the numbers, the most shocking to me is something called sentiment analysis: You know, this Big Data trick in which Web content -- usually in the form of Twitter tweets or Facebook ( FB) posts -- are agglomerated and analyzed to get a feel for how people feel about the world around them.

Sentiment analysis is what got fooled when The Associated Press had it's Twitter account hacked and a fake White House bombing sent markets into a tailspin. Take a look at Sentiment140, or Opinioncrawl.com if you seek a direct sense for this family of tools.

But when I actually tried my hand at creating just such a sentiment analysis a few weeks back, as interesting as it was to capture two hours of live tweets and use a coding language called Python to sniff out the sentiment of those tweets, a basic and obvious question lurks:

How many tweets does one need for these mostly meaningless 140 character phrases to magically morph into a meaningful "sentiment" an investor can trade against? Big data practitioners assume the logic of statistics is at work here. More numbers, more tweets and more data make a more accurate model.

It only took one fake tweet to crash the Dow, though. So who really knows how many of these suckers you need. It all creates a level of uncertainty confirmed by data analysis experts.

If practitioners do not understand how these tools work and trust in the black box of analysis techniques, you can wind up in real trouble -- that's how Bill Howe, director of research for scalable data analytics at the University of Washington, described it in a recent lecture at Coursera, the online education service offering excellent training in data analysis.

Buy and hold what's real
And that, friends, makes Gardin's simple, elegant and powerful approach to his photos such a flash of investing genius. In this sinking lagoon of data overload and confusion, when it comes to finding investments worth owning over time, borrowing the nondigital approach that works for Gardin should work, in an adapted form, for investors.

The world does not live entirely by numbers. It's out in the world itself. So go out and find something that interests you and makes sense to you. Then figure out a simple way to invest in that interest.

And let reality do the rest.

Because hoping numbers will do your work for you is nothing more than a gondola ride to nowhere.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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