Enthusiasm for artificial intelligence and multimedia information in the financial industry is at an all time high. Every leader in finance now feels the pressure to answer the question, “What is your AI strategy?”
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"I belong to the warrior in whom the old days have joined the new"
-Katsumoto, The Last Samurai
There seems to be growing consensus in the investment community that the Japanese stock market is one of the better places right now to invest.
The Fed has once again pushed back expectations for a rate hike until later this year, and the markets have once again rallied. Last week the Nasdaq eclipsed its 15 year high from the dot com days (scary) and investors are ever concerned about valuations. Most developed European markets have been terrific this year, but have begun stalling with the ongoing Greek debt issues and have been increasingly volatile.
The yield on the 10 Year Treasury finally hit bottom and a two year low in early February of this year. Since that time, with expectations of the Fed’s impending rate hike, it’s been rising steadily. In these environments, so it goes, investors rotate out of sectors like Utilities where the dividends start becoming less appealing, and out of assets like Gold that provide no yield, and into Financials and Insurers that directly profit from higher rates.
For our weekly market calls, we typically provide fundamental or news based context around our statistics. This morning, we’re going to let the percentages do the talking and let investors put them into the proper context.
read moreA case in point is predictive analytics, such as those of Boston-based EidoSearch, which scans historical data for patterns that match current events.
read moreEidoSearch Begins Sales of Core Engine to Meet Quant Demand for Direct Access to Predictive Analytics. Boston-based predictive analytics vendor EidoSearch has begun providing its core analytics engine to customers as a packaged platform offering, to make its analysis functions more accessible to the most.
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"I am above the weakness of seeking to establish a sequence of cause and effect"
-Edgar Allan Poe
In today’s post, we’re going to provide 1 month projections for each Sector using the current conditions in rates for the 10 Year Treasury AND price trends for each Sector.
The yield on the 10 Year Treasury finally hit bottom and a two year low in early February of this year. Since that time, with expectations of the Fed’s impending rate hike, it’s been rising steadily. In these environments, so it goes, investors rotate out of sectors like Utilities where the dividends start becoming less appealing, and out of assets like Gold that provide no yield, and into Financials and Insurers that directly profit from higher rates.
For our weekly market calls, we typically provide fundamental or news based context around our statistics. This morning, we’re going to let the percentages do the talking and let investors put them into the proper context.
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"Baseball is 90% mental, the other half is physical"
-Yogi Berra
Monsanto (MON) is down 6% over the past three weeks, while the S&P 500 is only down about 1.5% over the same period. For a stock that trades with high correlation to the market, that’s a distinct move.
For our weekly market calls, we typically provide fundamental or news based context around our statistics. This morning, we’re going to let the percentages do the talking and let investors put them into the proper context.
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"The best qualification of a prophet is to have a good memory"
-George Savile
Forecasting future returns and volatility is a common practice littered with inherent “bugs”. Many models start with the assumption that markets will be efficient for ease of modelling, and apply normal distributions to forecast future returns and volatility for everything from risk management to asset valuations. We’ve learned time and again that this can be shaky ground to stand on.
read more"He is one of the most undervalued players in baseball. This guy should cost $3 Million a year. We can get him for $237,000."
-Pete Brand, Moneyball, 2011
EidoSearch does predictive analytics across both public and proprietary data sets, and we have done a deep dive on price trends to provide probabilities to the investment community. We can look at the trajectory of a stock’s price, and by finding similar price trajectories in a peer group historically, we have validated that there are conditions that contain valuable information about future returns that complement fundamental valuation statistics.
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"The best thing about the future is that it only comes one day at a time."
-Abraham Lincoln
Watching some of the NBA and NHL playoffs over the weekend, or at least getting the recaps on ESPN (kids soccer games), it was hard to ignore the proliferation of statistics being thrown at viewers:
· “When a best of 7 NBA series is tied 2-2, the winner of game 5 goes on to win the series 82% of the time.”
· “Hockey teams that have a goal differential over 20 during any point during the playoffs have won the Stanley Cup 9 out of 16 times.”
These are interesting factoids, and provide a barometer of sorts on the odds facing a team in different situations, but they are sorely lacking when it comes to depth of the conditions in these situations. Do the percentages change if the series started out 2-0 vs. 1-1? Does it matter if the game 5 winners plays the next game at home or on the road? These are additional conditions that can provide valuable information about the forward probabilities that are typically ignored.
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"Rosita: I was thinking later, you could kiss me on the veranda. Dusty Bottoms: Lips would be fine."
-Chevy Chase, The Three Amigos
After a 17% run up in 2012, the Mexican stock market (BMV IPC) has followed that up with a couple of clunkers: a drop of -1.7% in 2013 and -1.4% last year. The Index is up 7% thus far in 2015, but investors have every reason to be skeptical. The BMV IPC was up close to 9% through September of last year when it gave back all those gains and then some so here we are again.
read more"There are many analytics tools out there catering to investors with an abbreviated time horizon, looking to make quick, next-day or next-week money off an earnings beat or miss. But for fundamental investors with a long-term thesis on a company, understanding how to modify positions going into and out of earnings announcements has always been a difficult process to manage."
-Charles Trafton, a portfolio manager at FlowPoint Capital Partners, a Boston-based hedge fund.
Predictive analytics start-up EidoSearch has built an engine for fundamental investors to manage their positions around company earnings releases.
read moreTo learn more about our technology, research opportunities, or to get a live demo of our software, please click below.
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