Countable data not always critical for management

Not everything that counts can be counted, and not everything that can be counted counts.

-Albert Einstein

The first step is to measure what can be easily measured. This is okay as far as it goes. The second step is to disregard that which cannot be measured  or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what cannot be measured really is not very important. This is blindness. The fourth step is to say that what cannot be measured does not really exist. That is suicide.

- Daniel Yankelowich

There is the old adage from Peter Drucker, "If you cannot measure it, you cannot manage it." I can agree with that statement for normal operational management, but it is not true for risk management or general investment management. It may seem unusual coming from a disciplined systematic trader, but if you want to focus on "known unknowns" or "unknown unknowns" as potential risks, you have to move beyond simple counting.

The above quotes are from John Bogle's book, Don't Count on It, a set of his speeches and lectures over the last few decades. The Yankelowich comment is most telling for those who get too wrapped up in quant work. There is a need for diversification and risk management like stop-loses or limits on leverage for the exact reason that we cannot get all of the information we need from data. We have to have enough fail-safes in models to allow for what cannot be counted or has not been measured before.