Financial news is very different from news relevant to other sectors, because financial news drives markets and can greatly determine which investors profit, and which face losses. In a way, financial news has ‘split-second value,’ where even a mere split-second advantage can allow an investor to gain considerable foresight into future price movements of the asset in the news, which in turn leads to profit. Therefore, more than ever, investors are seeking new and better ways to access portfolio-relevant financial information and news, from the vast ocean of financial information that exists in todays marketplace.
When analyzing financial news, there are three key information characteristics which are highly sought after by modern investors:
As the 21st century progresses, we are beginning to see several new Fintech / Investech start-ups, who wish to improve the state of the financial services sector, and monetise the many opportunities for improvement. The biggest challenge faced by each start-up, however, is to meet these new investor needs faster than the 5 other start-ups trying to do the same thing. Several companies have come up with new technologies and solutions to source, curate and distribute financial news.
Financial Sector is ready to pay millions for a couple-milliseconds advantage
In the the financial world, literally every millisecond is worth an enormous sum of money. This fact was well described in the book, “Flash Boys,” by Michael Lewis, which many would be forgiven for thinking was science fiction. The idea was to build a hyper-fast information connection from Chicago to New Jersey, that would decrease the time lag in delivering data down from 17 to 13 milliseconds, i.e. the cable allowing front running to happen with a few millisecond advantage. One can only imagine the hypothetical profits that would be required to justify the $300 million price-tag of the new cable.
Another example of the importance of a low-latency access to financial news was the sensational case of insider trading committed by hackers in Ukraine. It was revealed in August, 2015, that several Ukrainians had hacked PR Newswire Association LLC, Marketwired and Business Wire, in order to receive corporate press announcements before they became public. Hackers had pilfered more than 150,000 press releases (corporate data, earnings reports etc.) and used it to strategically buy and sell shares in large companies (such as Hewlett-Packard Co., Boeing Co. Panera Bread Co., Caterpillar Inc., etc.) This fraud, which lasted more than five years and brought the hackers more than $100 million, has become one of the most publicized in the industry.
Even popular social media forums, such as Facebook and Twitter, are becoming increasingly relevant in the world of modern investing. Twitter, in particular, is no longer just another social network. By now we have been exposed to the power of Twitter in determining share performance. Elon Musk tweets about a new product line, and Tesla’s shares jump 4%, adding $1.3 billion to Tesla’s market cap. A trader profits from a tweet which indicates a potential acquisition by Intel. April Fools day’s tweet by Tesla with the intention of having some fun, gets investors excited. With the amount of financial information flowing through Twitter every day, it is no wonder that investors are beginning to turn to it for the absolute most up-to-date primary news.
With more and more news sources, reliability becomes a major factor to consider
The second criterion, reliability, is an important thing in the era of information technology and big data, when vast swathes of information make it difficult to sort-through, and find only information from trusted sources. The Internet and search engines provide us with an enormous stream of information, which unfortunately can’t be properly analyzed and internalized by the average human being. In this mass, the average person spends more time finding the valuable information, than they do actually reading. Furthermore, people have learned how to cheat search engines, and artificially raise their content in the search list, so the information you are receiving on your search is ranged not purely based on its relevancy but on the skills of the employee managing SEO efforts.
Similarly, it is important to remember that many mass media outlets are politically engaged, and sometimes sponsored by a narrow circle of people who tend to promote their own interests. To dig deeper, most available news are biased and subjective because of the individual understanding of the world: any person has their specific perception of the world and a set of values according to which people evaluate and range all things and processes. It is nearly impossible to express your thoughts like facts and not like opinions.
One financial news feed to meet the needs of all parties?
The last criterion of the financial information value is its relevancy, which denotes how well news meets needs of a particular user. It’s expected that people engaged in the same industry, such as investors, traders, financial analysts, corporate accountants, finance students, etc, will all tend to look at the same information from different perspectives. For example, when a company issues its earnings report, a value investor will be intrigued by the numbers which were stated there, a corporate accountant will consider the document from the legal and tax minimization points, a finance student will be interested in the general form of the document and some basic things, while a day trader will focus on the date of the earnings report itself. Thus relevant financial information must be based on the user’s previous experience and reflect his current interests.
The process of receiving low-latency, unbiased, and personalized news feed was unthinkable even around 10 years ago. Nowadays, however, with the level of technological development and advancement that has taken place over the past 20 years, and the sheer amount of content shared and distributed online by people across the globe; this process has become feasible. There are some cases when single tweet can move the market and add billions of dollars to the market capitalization of particular companies:
- Carl Ichan tweets about his huge stake in Apple (AAPL) leaped the share of the company by 5% in August 2013;
- Elon Musk’s tweet about new product line added more than $1 billion to market capitalization of Tesla (TSLA) in March 2015.
The question is how an individual investor/trader can analyze all this overflowing information, which includes that distributed by hundreds of mass media outlets, SEC filings, analysts and influencers opinions. It is here, specifically, where aggregation technologies and financial news aggregators will take up their role. New aggregation platforms and technologies are being established to help us to consolidate many web resources in one place, where users can receive squeezed low-latent up-to-date information. Financial news aggregators reduce the time and effort that are needed to regularly surf the internet for new updates in the world of finance. Think of how amazing that is, receiving instantaneous AND relevant financial news all in one platform. Traditional financial information funnels simply lack in their ability to provide information on a timely basis, which can result in missed opportunities. Furthermore, in this way we get closer to unbiased and objective news, by collecting all existing people’s opinions on the particular topic and trying to source the consensus idea, without criticizing the outliers and providing the whole background on the specific topic.
CityFALCON has been built to address the mentioned issues.
We collect financial information form around the Internet, especially from such social networks as Twitter. Our engine gathers all available information and tweets on particular topic (public companies trading on major stock exchanges), then it filters out irrelevant information (spam, promotions etc.), and finally it scores each piece of news according to our proprietary algorithm, so people can see top news for their investment portfolio and save hundreds of hours on their investment research.
This is why aggregation technologies are the answer. They suit 3 main criteria of financial information: low-latency, reliability and relevancy. It’s one step forward to “unbiased” information space and information society where people have equal access to information regardless their amount of wealth, location, nation, culture etc.