Slashdot Mirror
Internet Data Mining for Investment Analysis
CaroKann writes "Reuters is reporting on a Wall Street investment research company, Majestic Research, that is using web crawling techniques to track business performance. Instead of attempting to estimate business conditions by talking to company management, or pounding the pavement visiting stores, this company uses data mining systems to collect real-time sales data and other information on companies that have a web presence. Using this data, Majestic attempts to estimate company earnings more accurately than traditional research outfits."
Nope, it won't, because even if it does, everyone will start using it and render it useless. There is only one trend in stock market that is backed up by statistics over long run and that is the stock market drifts upward overtime. My professor did a exmeripment using computer modeling, basically using a random number generator to decide if the stock market goes up or down, adding the 'upward drift' factor using historical data and comparing it to the actual data over last 75 yrs, and two data looks almost identical. I know it doesn't "prove" my point, but it does show that playing stock market short term is basically a flip of coin.
Macro forecasts are not worthe the paper they are printed on, my models were designed to interrpet when others were missing things like market share shifts and competitive advantages that...
Good for you. And when you get your fixed interest rate mortgage, when a company takes out a loan for investment, when you have a great investment idea but need to buy a cascade of 10 year futures (invest in a gas pipeline but want to invest in the quality of the management rather than take risks on anything and everything affecting the gas price and the second order effects on your investment) to mitigate your risk and make the bucks you planned, you are relying on macro forecasts.
They are broad-brush efforts, very rarely would a 'macro person' deny that. But they are essential to the modern running of our global economy. The point of 'analysts' [stock market analysts, rather than economic analysts] is to have ideas about individual companies, perhaps sectors vs. sector or region vs. region if pushed to it. Consensus Forecasts (which accumulate individual stock market analysts across companies, markets and countries) are laughable when looked at on a macro level, even more laughable than economist estimates. There are some excellent analysts, but they are usually the ones that accept estimation is, to varying degrees, educated guesswork, rarely will there be one sure choice; and if there is, that's because time, dedication, luck, restraint and insight have been combined.
If any readers fancy a quick run-down of macro economic policy, I recommend today's publication of the Bank of England Inflation Report, or more specifically, the live press briefing where topics are discussed in a straight-forward way. Hopefully Bernake will implement something similar at the Federal Reserve to improve on Greenspan's smoke and daggers approach to public statements.