The technology of market information has changed drastically over the last two hundred years. Some of the changes include the telegraph, the telephone, and computers. Over the last several decades, traders have produced great returns from using computers for quantitative analysis, but those methods have become so widespread, that they no longer provide the edge necessary to make a difference. Where is next source of information advantage?
In this presentation from the O'Reilly Money:Tech conference, David Leinweber of UC Berkeley says that the next place to find alpha information is on the web. While computational market data includes a lot of valuable information, Leinweber insists that it is missing critical contextual clues. By adding the textual analysis of online news sources and reports, investors can provide additional insights, but Leinweber recommends caution. He urges that the new contextual information must be used carefully. News from mainstream sources usually follows market movement, so in order to act on information, you need access to primary sources like SEC reports and press releases.
David Leinweber’s professional interests focus on how modern information technologies are best applied in trading and investing. As the founder of two financial technology companies, and a quantitative investment manager he is an active participant in today’s transformation of markets
Clients at his consulting and software development business include some of the world’s largest investment managers and hedge funds. These tasks involve trading systems and automated analysis of textual and Internet information sources. All build on his history of innovation in financial technology.
This free podcast is from our Money:Tech series.