For decades successful investment has depended on not only a sound understanding of financial modelling, it’s required a considerable degree of intuitive interpretation, predictive insight, self-fulfilling prophecy, and dare we say it – luck. In 2018 however, we have something better than luck to depend upon. We have data. Big data.
It is leading us to nothing short of a revolution, overthrowing model-based traditional financial economics with a new generation of data-driven analytics.
The old style, model-based approach to investment hid behind arcane language and the ivory towers of academia, deliberately inaccessible and elitist. In a world where an MBA from the right school and getting published in the right journals more than made up for losing trillions for your clients (and getting bailed out by banks anyway), it’s hardly surprising that this thoroughly gate-kept environment arose, to protect the investment professionals and their dark arts. Public scrutiny, never mind accessibility, was the last thing anyone wanted.
But a new world is dawning, as people realise that they can demand something different.
Everyday people, who want to maximise the returns on their earnings and make sound choices for their future, are realising that tools now exist – consumer-level technology enabling anyone who takes the time to learn to use it to take their portfolio into their own hands, and have every chance of achieving superior performance to that of the traditional professionals. The gate-keepers are being swept aside, as the model-based ‘science’ of finance and economics is being blown away by the data-driven philosophy of today’s technology combined with the sheer volume of accessible data.
This is the world we deserve to live in. A world where the talking heads of CNBC reflecting on historical earnings reports are replaced by real-time evidence of profitability and success, which anyone can read and understand for themselves – and make informed decisions about where and how they want to invest for themselves.
A world where one day the basic principles of money management are properly taught in high school, not business school – because everyone understands that finance and economics are measurable subjects of mathematics and science, not mysterious art-forms hidden behind arcane language and exclusive institutions.
The tools investment professionals use are exploding at a staggering pace of development. Machine learning and AI can interpret investment signals in a way that human ‘experts’ simply cannot, due to our cognitive biases and emotional expectations – and they can analyse millions of data-points in a heartbeat in order to do so. Exploiting the potential of new technologies from blockchain to natural language processing, it has never been a more exciting time for innovations in predictive analysis. And increasingly, consumer-level versions of these tools are emerging across the market, enabling individual investors to make their own informed decisions, using domestic devices and processing power.
Data-driven analysts use their unique human strengths in a complementary way, to take account of social trends and sentiments, and decide which datasets to bring together, to surface the interesting and unexpected narratives which drive new opportunities. It’s the combination of this insight with the empirical outputs of scalable analysis tools, which is where the magic happens, and as a consumer in the real world your instincts and insights are just as valid as any professionals.
Data Driven Investor will empower you to use your unique mindset and experience, in combination with the latest technical tools and innovations, to join the revolution. Until school curriculums are updated, self-education is the key for intelligent adults who want to manage their finances in line with evidence rather than assumption, and take responsibility for their own wealth. Data Driven Investor will help you understand the tools available to you, to understand asset classes, risk, and potential outcomes, how to evaluate the sources of knowledge themselves, to make informed and clear-minded decisions.
Be part of the revolution!