Tadas at Abnormal Returns had me on last week for a conversation about all the crazy things I do. From my book, Tradestreaming, to the ebook I published to help financial people get books published, to my free download on how to grow a financial services business like Ken Fisher did. We talked a lot about the state of the art in investing and industry trends.
He’s really got game. You can watch the interview below. Of if you don’t see it, click here.
On Tradestreaming Radio, we’re interviewing lots of innovative entrepreneurs, investors, and researchers all trying to make investors better at what they do. Check out our archives. Subscribe on iTunes.
We welcome Robert Wright, co-author of a new book The WSJ Guide to the 50 Economic Indicators That Really Matter: From Big Macs to “Zombie Banks,” the Indicators Smart Investors Watch to Beat the Market
Wright is a university professor, prolific author
We discuss:
(Amazon)
Join us this coming Monday May 9th @ 4pm ET for a free online discussion on the “5 Myths About Cloning Hedge Funds”.
We’ve been following hedge fund replication strategies (what I call piggybacking) since the early days of this blog and back to 2009 on NewRules. It’s not only a topic I like to analyze, but I’ve moved a lot of my own investment activity to leverage the power of cloning.
Readers of Tradestreaming will know that AlphaClone, a research platform that enables investors to backtest multiple cloned portfolios of the world’s best investors, has been helping to make piggybacking practical for all types of investors.
But investors I speak with still struggle with understanding the rigor in cloning — misconceptions about the strategy still abound.
So, I’ve invited Maz Jadallah, founder and CEO of AlphaClone, to address these issues. In an upcoming webinar, we’ll discuss:
Space is limited. Click here to reserve your seat now.
We’re looking at new schools for my soon-to-be high schooler son.
As parents, we’ve made so many mistakes, learning and futzing things up as we go.
I’m not the same parent as I was 13 years ago.
Investing isn’t an activity — it’s a process.
Tradestreaming is all about learning from — and sharing — what we’ve experienced.
From my interview earlier this week with Jonathan Clements (author of The Little Book of Main Street Money and previously the personal finance columnist for the Wall Street Journal)):
A lot of what it takes to become a good investor and a good manager of your money is just time. Think about people’s learning curve — in some sense we don’t really get an opportunity to become experts in money management unless we really put our minds to it. Most of us will only buy 2 or 3 or 4 homes during the course of our lives — we never really get the chance to become experts at that. So, there’s a good chance that we’re going to mess up.
Similarly, we only get to claim Social Security once, so in terms of when to claim Social Security, there’s a good chance, we’re going to mess up royally.
And similarly when it comes to investing, yeah, we’re going to get the chance to see a lot more bull and bear markets than we would opportunities to buy homes. Nonetheless, the chance to mess up is enormous in part because people have to cope with all this noise.
I’m sending my kid to high school. Like James Altucher, I don’t know if I’ll send him to college. There is so much information readily available to investors, you can get a degree in hard knocks if your’re diligent and interested.
You just have to plug into the Tradestream.
A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest
Research update: Activist Investing (The Activist Investor): More research into the value extracted by activist investors — this time looking at shareholder proposals and voting.
The art of investing in today’s economy (Tradestreaming): New podcast with the former personal finance columnist for the WSJ, Jonathan Clements.
Favorite Boutique Asset Managers Launch New Funds (Morningstar): Ariel, Fairholme, Royce, FMI among the firms launching new mutual funds with interesting strategies.
May 3rd poorest performing month in pre-election years (Stock Trader’s Alamanac): A hypothetical $10k investment in the DJIA for November-April would have compounded to over $500k (1986 – present) while May-October would have resulted in a $379 loss.
Sectorology: How the financial sector stacks up against other industries (Random Roger): Interesting view on short-term, long-term investing in financial stocks.
The predictive power of the combo of Morningstar stars, expenses, investor returns, manager records and active share (Morningstar): More Morningstar research on how best to use their information for profitable investing.
Online brokerage no threat to advisors? Yeah, and I’m a meat-eating rabbit (New Rules of Investing): Redefining the role of brokerage and advice in the age of social media.
Curious to see what resources you use and find most useful for hedge fund cloning, tracking, piggybacking. Vote on the ones below or add your favorites.
A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest.
The Wizard of Lies: Bernie Madoff and the Death of Trust
Comparison of 4 commission free ETF portfolios for less than 20 bps (World Beta)
Introducing the most powerful (premium) stock charts (Ycharts)
PIMCO files for ETF version of Bill Gross’ Total Return Fund (SEC)
Ameriprise gets into the ETF game by buying Grail (ETFdb)
Geezeo launches referral engine to help financial institutions cross-sell (Finextra)
Who is the top stock picker of the decade? (InvestmentNews)
Up-beat note for company-sponsored equity research (Integrity Research)
On Tradestreaming Radio, we’re interviewing lots of innovative entrepreneurs, investors, and researchers all trying to make investors better at what they do. Check out our archives. Subscribe on iTunes.
From this perch, it seems like investors are witnessing a Renaissance of tools, data, and research that overlays investor psychology on 24/7 streaming content of the Internet.
The magic bullet for individual investors and hedge funds alike is to use this data to create profitable trading strategies. Previous podcasts have looked at using Google search data to find rising stocks. Other tradestreaming techniques have centered around creating forecasts of future events using online media.
This week’s guest on Tradestreaming Radio is Richard Peterson, MD (yes, that kind of doctor). He’s also an RIA and his firm, MarketPsych LLC helps to coach investors and their advisors into making better investment decisions. More interesting, the firm has developed a sentiment analysis engine from its own experience trading quantitative strategies in an in-house hedge fund.
Dr. Peterson’s new book, MarketPsych: How to Manage Fear and Build Your Investor Identity (Amazon link) is an amazingly refreshing read. All investors struggle with assessing their risk tolerance, performance and decision making. While behavioral economics/finance has helped us understand what problems we face, it hasn’t helped a whole lot in truly helping us change our investing behavior. MarketPsych provides a clear overview of the problems and gets its hands dirty helping us investors help ourselves.
In the podcast, we talk about:
This transcript is of a conversation I had with Dr Joey Engelberg, Professor of Finance at the University of North Carolina’s Kenan-Flagler Business School (listen to the podcast). You can always subscribe to Tradestreaming Radio on iTunes.
In my book, Tradestreaming and on my website, I talk a lot about what I call collateral research. This is information that’s inherently non-financial in nature, but that investors are using to aid in their investment decisions.
Using Google Search Data to Invest by tradestreaming
One example I talk about in the book specifically is Amazon sales data. You can go onto Amazon.com, look up best selling computers, and you can get a list at that moment in time, updated hourly, of what’s selling well. So, if you were an investor in Apple, and Apple was introducing a new product to the market, that information, although it doesn’t say specific sales numbers, of what Apple itself is seeing through selling on Amazon, that information is at least important in the sense of how well a product may be received into the market.
Another area of concern for investors, of interest, is Google search data. Google recognizes that itself, and launched about two years ago on Google Finance something called Google domestic search trends, GDST. That’s a mouthful. What that is basically is Google itself is looking at a vertical search, something about the auto industry, unemployment, something where there are a series of search terms around a particular category, and then mapping them against the volume of other search queries.
So, you can get a feel for, qualitatively, how a certain search term or industry is trending vis a vis the rest of the search market. You can then overlay that information on top of an ETF or a mutual fund that may track that industry, and you can get a view for how well some of that data may, or may not influence future price movements.
Today’s guest on the podcast is Joey Engelberg, who studied this actually quite intensely. He’s a Professor of Finance at the University of North Carolina, the Kenan-Flagler Business School. He previously worked at the SEC, as a research specialist.
He recently produced a paper that caught my eye, called In Search of Attention. That basically looks at Google search data and tries to map it to future price movements. He actually did find a correlation that certain abnormal trends in search data can lead to abnormal returns in the stock market.
Continue reading “How to use Google search data to invest (transcript)”
A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest.
How financial blogging landed me a book deal (New Rules of Investing): Blogging is hard to monetize. Here’s one way financial bloggers can begin to build businesses off their work.
Why investors overpay for certain investments (The Economist): Liquidity and lottery tickets and why the carry trade fails at the wrong time and just below investment grade corporate bonds perform best. From Expected Returns: An investor’s guide to harvesting market rewards.
Trades busted in new FocusShares ETFs (ETF Trends): Scottrade’s new ETF line, Focus Shares, had multiple trades busted. Some shares saw a 98% drop as Nasdaq canceled them.
Wealth managers refine niche marketing techniques (Registered Rep) : Growing reliance on segmentation of new business development by wealth managers. This time, Indian Americans.
Investing as a form of peer pressure: teaching kids to invest young (MarketPsych): In an interview with Tile Financial, this money manager/sentiment data player digs deeper to help understand kids’ motivation to invest.
10 most tracked funds, fund groups and stocks (AlphaClone): Most popularly followed hedge funds and stocks held by these hedge funds as tracked by piggyback investment research powerhouse, AlphaClone.
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