Big Data: Counting What Counts
Through the use of fiber optic technology, we can take all of the data from every quarterly report of every company that’s ever been listed on the New York Stock Exchange since its inception and transmit it from New York to Los Angeles in less than three seconds. The question three seconds later is: What do you know? What have you learned? What action should you take?
In the book Money Ball, Billy Beane got his edge by looking at data in a different way than general managers of other teams. With the smallest budget in Major League Baseball, he was able to create a highly profitable and winning team. He wasn’t popular and his method upset the baseball establishment. He wiped the slate clean and simply let the data tell the story. In a similar way, we used computers to look at data in a different way, to analyze it and to figure out what really matters.
My Path of Discovery. When I was a stockbroker in 1992, I realized that most firms (including the one I worked for at the time) measured success not in how their investment strategies benefited clients but in how much money the firm made. The whole system, I began to see, was built that way. I believe the people I serve deserve more.
So, using my own resources, I developed a program that I used for investment selection. I set out to develop tools and techniques to discover common denominators in major market moves. I built a prototype and then I tested it repeatedly, both on the computer and with my own money (but not with client money). Technology would hold the key. With technological advances, I could have massive computer power at my fingertips that would have been impossible for a small firm to access a generation ago. Technology, it has turned out, has become the great equalizer between small and large firms.
It’s been said that most businesses don’t count what really matters. I sought to discover what really mattered in the financial markets, so I started with a clean slate. I used massive amounts of data and used technology like a diagnostic tool, an MRI for investments. I wanted to filter out the noise and discover what clues markets leave, and then develop a series of dispassionate triggers.
My personal belief is that much of Wall Street looks at and measures the wrong things. What we need to look at and what we need to be asking is this: What are the conditions and clues when markets, or asset classes, have a high probability of going higher? What are the conditions when they have a high probability of going lower? Where is the risk high and where is it low? That’s what I set out to discover, and that’s the kind of information my tools produced.
That information led me to formulate three principles, and use a strategy that puts as much energy into deciding when to get out as it did deciding when to get in.
This is a good time to emphasize that no process is immune to losses. No process guarantees a gain. A good process can, however, provide an escape plan so as not ride out a protracted downturn.
My journey led me to look at the data to discover what matters, to count what needs to be counted, measure different things, and look at the world differently.
Show Us Your Logo Wear
Pictured here are Richard and Sonja Chase with Chef Chris Mayer in Taos, NM. After selling their company in 2012, they decided to combine two of their favorite loves; touring America and learning to cook specialties from every region of the country they visit. So far it’s been, Green Chile Stew with Potatoes from TAOS NM, Gumbo from New Orleans and Artisan Breads from Nashville. (Recipe’s available from Sonja at firstname.lastname@example.org).
Sonja, a Tennessee native and Richard, a transplant from California, just celebrated their 20th wedding anniversary. They met while working at Levi Strauss & Co. where they worked for over 20 years. In 1990, Richard left Levi’s and along with a partner, opened Omega Apparel Incorporated. The company focused on apparel manufacturing for the Department of Defense and developed the company into one of the premier apparel contractors for the DoD. The company was sold to another veteran and is still in operation in Tennessee.
Sonja and Richard have a daughter and two sons. Their sons are both veterans of Gulf I and Gulf II. Currently, one is a Police officer in Knoxville and the other a Fireman in Oak Ridge TN.
When asked why they choose to travel in America rather than worldwide, their response was “We live in the most diverse, beautiful country in the world. There is so much to see in our own back yard that it will take a lifetime to see it all. Why go to someplace to struggle with the language and exchange rate when you have the Grand Tetons, the San Antonio River walk, New Hampshire in the autumn, jet boating on the Snake River in Idaho or the chance to watch the Pacific ocean waves crashing on the Oregon and Washington coast”.
“America is beautiful and we are going to explore it, one chef at a time!!!”
Sonja and Richard