But suppose he gets married to a woman who already has a child and elderly parents. All of a sudden his online account is getting orders for life insurance, strollers, and Geritol. A smart algorithm will rapidly figure there has been a major lifestyle change. A dumb one will take years to average in the new data and incrementally change. It even confuses matters and can get in the way of a good analysis with other, now more relevant, measures.
Simplification has tremendous value.
If you are making decisions based on invalid, meaningless, or irrelevant actionable indicators, especially ones that can vary rapidly, such as with market conditions, you are going to waste a lot of time and money unnecessarily changing your trading, business, or marketing direction. Perhaps with a great deal of experience, people comprehend many subtle distinctions, with just the right ways of updating and combining them. With this ability, knowing exactly what to expect from limited data becomes far less difficult. I hope I have illustrated in the last two articles that making a forecast model is not a straightforward process. Often you cannot derive a pure answer without substantial experience with the domain in question.