Data Trends for Investment Professionals

GO TO QUANDL.COM ⟶

The Cost of Free Data: Why Use Premium Stock Prices?

Quandl has always prided itself on making financial and economic data accessible to all investors. This is why a number of our datasets are free resources, like the Federal Reserve Economic Data (FRED) and US Energy Information Administration Data (EIA). While we’re happy to support these products for the foreseeable future, we nonetheless advocate for the use of premium sources for professional investors.

Understandably, one of the most common questions we get is “Why should users pay for premium stock price data, when stock quotes are available for free from many different sources?”

Free sources may be appropriate for casual users but professional investors and analysts benefit greatly from Quandl’s premium service. The word “free”, however, is often misleading. While free sources do not come with subscription charges, they nonetheless come at a cost. For example, Yahoo unexpectedly stopped supporting their API recently, leaving many thousands of people stranded. If you are serious about your investments, see below for a list of the benefits of switching to Quandl’s premium stock price data.

Documentation and methodological transparency

Data from free sources is often poorly documented. Where do the prices come from? How are they pre-processed? How are errors identified and corrected? How is consistency enforced? At what times are observations made? These questions are critical to any professional investors and data analysts. Users of free data sources are left to guess the processes that comprise the data pipeline.

Quality control

Spikes and troughs, gaps and outliers are common in free data sources. Price adjustments for dividends, splits and other corporate events are sometimes glaringly incorrect; at other times, these adjustments are completely absent.

Client support

There is no easy way to report errors or get help with free data sources. Technical support is minimal; data support is non-existent. Apart from website terms of use, which serve mainly to protect site owners, there are no SLAs, no guarantees of quality, accuracy, timeliness or usability, nothing. Thus, a data provider can limit or even discontinue their API feed at any time without notice or support to existing users, as Yahoo Finance did with their real-time quotes Yahoo Finance did for their real-time quotes.

Seamless delivery

Downloading free data is tedious and time-consuming. There is no public-facing API reference, so users must reverse-engineer URL syntax and fumble their way to getting the data. Even then, downloads are inconsistent across symbols and are often throttled without warning. There is no metadata and no easily available symbol list.

Advertisement-free

Put simply, the creators of these sites do not want you to download their data easily. With free websites it’s your page views and clicks that pay their advertising revenue; hence they want you to spend as much time on their site, to maximize those page views and clicks. For these sites, inefficiency is a revenue-generating feature, not a user-experience bug.

The premium experience

Contrast the paid data experience: When you pay a publisher for data, the publisher is motivated to provide high-quality, highly usable data, otherwise you will unsubscribe. The higher the price point, the greater the expectation for quality and reliability, and justifiably so.

No finance professional uses free sources for stock price data and this should come as no surprise. The same goes for business analysts, consultants, portfolio managers and sophisticated individual investors. If you’re making business or investment decisions with data, you need data you can trust. You need quality, accuracy, efficiency, timeliness and reliability. Those are attributes you simply cannot get from a free data publisher, and it is foolish to expect otherwise.

Browse our database offerings

VIEW COMMENTS

Leave a Reply

Your email address will not be published. Required fields are marked *


No Comments
Fix This
Created with Sketch.