I was flattered this week to see an executive at a vendor quoted in one of Inside Market Data’s sibling publications stating almost verbatim a sentiment I expressed in this column a few weeks ago. Either we arrived at the same opinion independently (confirming that either I accurately reflected market conditions, or that we’re both equally out of touch), or perhaps said executive found my opinion so convincing that he felt compelled to re-use it.
Either way, it shows that opinion matters as much as the fact being reported, which is borne out by the number of traders who value market commentary and the opinions of experts more than plain vanilla reporting of facts. Why else would retail and institutional investors alike use tools like WhaleWisdom, MoneyChakra—which will this week announce an iPad app that sources 13-F filings data from on-demand data vendor Xignite—and YCharts to follow the investment decisions and opinions of financial mavens such as Warren Buffet or George Soros?
But, as is evident from watching different news channels in the run-up to the US election, the opinion you get often depends on where you look for it—much the same argument that independent research providers or ratings agencies might make against their broker research or traditional rating rivals. So one lesson from this should be: don’t just look in one place if you want a well-informed and rounded opinion. Go to multiple sources of opinion before formulating your own. It’s this hunger for information that has driven rising levels of data consumption over the years, to the extent that professionals become overwhelmed by information, and hence want numerous sources of opinion that have already interpreted raw facts. And incorporating additional inputs can yield benefits: Index provider MSCI—whose ESG (environmental, social and governance) ratings and research were incorporated into FactSet Research Systems’ products last week—believes that using ESG data as an additional input into investment decisions leads to better performance. So can forensic accounting that provides a more accurate representation of a company’s financial health, such as those provided by vendors like GMI (formerly GovernanceMetrics).
In short, the more accurate and comprehensive your underlying inputs, the better your opinion is likely to be. But some potential data sources remain under-utilized, or even invisible. According to a survey conducted by Capco, financial services firms in Europe are struggling to harness the potential of unstructured and social media content, citing the reliability of data from these sources. But (returning to election comparisons) few people raise the same objection to voter polls—though they quibble over margins of error—which can now be broken down so scientifically as to resemble a quantitative analyst’s index research. Of course, if you’re quibbling over margins of error, you may have missed the point: don’t bet the farm on one input, but rather draw conclusions from many.
And for firms concerned with latency and capacity issues—which is to say many who would be potential clients of many services featured in this week’s issue, from the London Stock Exchange’s new connectivity service to Orc Software’s use of NovaSparks’ feed handler appliance and CFN Services’ cloud-burst offering—the advent of high-bandwidth 100-Gigabit networks is causing headaches for firms struggling to reach an opinion on the performance of their new networks, because latency and network performance tools developed for 10G networks cannot easily be applied to 100G infrastructures. The result? Firms have little or no visibility into issues affecting the performance of these bigger networks, according to officials at Endace, which is rolling out a new tool to address the problem.
So don’t be blind-sided by important issues: whether you’re focused on politics or your portfolio, take pride in reaching an informed opinion, and ultimately, in exercising it. Your opinion matters, so whatever you do, make it count.
Bryan Harkins joins to discuss how the CBOE-Bats integration is going and plans for the exchange operator going forward. Anthony and James talk about the SEC hack and Esma's potential new powers.Subscribe to Weekly Wrap emails