Data Trends for Investment Professionals

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A Taxonomy For Alternative Data

We're witnessing a data revolution. You all know by now that we've produced more data in the last 2 years than we have throughout all of humanity. And the pace is only increasing. It begs the question: how do you extract actionable trading signals from this brave new world of noise? It starts with understanding the landscape. Here is Quandl's take on the taxonomy of alternative data for finance.

The Unbearable Transience of Alpha

In 2004 I enjoyed my 15 minutes of fame for an article I wrote called The Tao of Alpha, in which I explained the concept of alpha as a zero-sum game. Sources of alpha in 2004 were much different than those available in the mid-1990s when I started my career and they are also different from today's. Alpha is highly transient and has been coming and going for as long as capital markets have existed. The term “alpha” entered the vocabulary of Wall Street sometime in the 1980s, gaining widespread use in the 1990s with the proliferation of hedge funds.It...

Satellite Companies Moving Markets

Stop me if you’ve heard this one before: high resolution images taken from space now allow us to count cars in retailers’ parking lots, and therefore estimate quarterly earnings ahead of the street. Or this: we can use trigonometry to measure the shadows cast by floating oil tank lids and then gauge the world’s oil supply. Or this: we can monitor the vehicles coming and going from industrial facilities in China, and create a nascent China manufacturing index. Dozens of other possibilities exist, bound only by our ability to imagine what we can infer about markets based on high quality...

What gives a trader an edge? An interview with trader, analyst, and portfolio manager Adam Grimes

Recently, Adam Grimes and Quandl co-founder Abraham Thomas sat down to talk trader-to-trader about how the market has changed over the past two decades, from Adam’s days at the NYMEX and the CME to his current role as Chief Investment Officer at Waverly Advisors. Adam Grimes has two decades of experience as a trader, analyst, and portfolio manager. Though he refers to himself as a critic of traditional technical analysis, he has literally written the book on it (The Art and Science of Technical Analysis, Wiley, 2012). AT: Let’s begin at the beginning. How did you get started trading? AG:...

Alternative Data – The Newest Trend in Financial Data

As quants, we’re all aware that every model has a shelf-life. Sooner or later, the ideas and techniques behind every “proprietary” analytical technique diffuse into the broader world, at which point that technique is no longer the source of a competitive edge or alpha. What’s less well appreciated is that a similar pattern applies to the world of data. Rare, unique and proprietary data eventually diffuses and becomes commonplace, easily available, edgeless data. The best analysts constantly reinvent their models, to avoid their inevitable obsolescence. Today, they're venturing into the world of alternative data as a new source of alpha. "Edge-worthy" Data...

The Tao of Alpha

In 2004 I was running a hedge fund consultancy, where I advised many of the world's leading hedge funds. With this perspective, I wrote an article called The Tao of Alpha. The article offers a unique viewpoint on how alpha was then used and understood. We have transcribed the original article below. The Global Alpha Shortage Even the least sophisticated of investors understand that alpha is something to be pursued. Alpha is good. And more alpha is better. Not surprisingly then, most marketing documents are laced with the word. It slips easily off the tongue of marketers and managers. It appears in conference titles, as in “Portable...

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