I’ve never written a blog or posted anything on social media but what I wanted to record what I am currently doing, its success (and failures) to sort of remind myself and not sweep it under the carpet even if this project fail.
You see, I’ve just created a startup and the reason was : One day, my friend Sam, who I have known for 3 years came to me and shared with me his investment methodology. I was a dealer in fx, interest rate, commodities, equities, every trader you named it, everyone had their so called own “magic formula" to make money. And so I listened (again).
What got me excited was not just about his investment methodology which involves both fundamental analysis, technical analysis and quantamental analysis; the latter, a methodology coined by Goldman Sachs as “quantamental analysis”, defined by Business Insiders as the new "Masters of the Universe"; but the fact that he is able to programme his investment logic into an algorithm. I was the CEO of a Securities Brokerage and I have worked in the finance industry with some of the smartest and best traders but I could count by 2 hands the number of people that can trade and code as well. To be fair, quantitative investing has been around for a long time, a common strategy adopted by hedge funds using computer algorithm. However, I have not come across using computer algorithm to perform fundamental research nor quantamental research.
A major part of producing equity research is about analysing financial statements and coming up with a target price recommendation and analysis. Producing research is a tedious and laborious process and therefore we only get research reports for some top blue chips and large cap stocks but rarely anyone writes about the mid and small cap stocks. Research has always been a cost centre, subsidised by sales commission from the trading side. With the implementation of MiFID II in EU, the number of equity research will likely decline further.
My Eureka moment : with Sam’s model, we will be able to produce fundamental research, technical and quantamental research not only for blue chips but theoretically every listed stock in the world. In this era of cheap cloud computing power, we can write research reports for the whole world’s 55,000 listed stocks equity research every day (not quarterly) without any human involvement. The computer can now replace (some, not all of) the work of a human research analyst. Yes, I know the machine cannot write 30-page research reports (who reads 30-page reports nowadays anyway) nor provide the kind of in-depth analysis or the ability to read between the lines from transcript calls like a human (yet) but nevertheless, this is a start and it will be the future.
So, together we founded Binary Analytics Management (“BAM”) Fintech with an aim to democratise research for the investing public, our research will be short, concise and most importantly, we will deliver it in simple layman terms so that everyone can understand.
Sam is my co-founder and CIO today. We are hard at work training RoboJean to perform fundamental, technical and quantamental research and we will bring RoboJean to you soon in Q32018. Stay tuned....
- Terence Goh
Co-founder | CEO | Author