Why News Quantified Works
News Quantified democratizes stock market data to level the playing field for smaller investors. We’re not interested in hyping hot stock tips, a secret sauce, or a “guaranteed system to get rich in 365 days using the stock market.” We’re offering a full-featured, professional grade analytics platform designed to address the core obstacles faced by real-life investors.
Why We Built News Quantified
Retail investors have always faced a profound challenge in the stock market: how to succeed in a stock market full of lavishly-funded, extensively educated, institutionally-backed professionals? One solution is to give up and pay these professionals to manage your money for you. Another is to search for that special secret that will help you succeed.
The internet provides lots of dubious “magic formulas” (ask yourself this—if it’s really a magically profitable formula, why aren’t hedge funds exploiting it for all the profit it can generate?) There’s also great information, more than ever before, on how to conduct in-depth research on the fundamentals of a stock’s valuation. But, while perfectly sensible, all the online commentary and debate on how to correctly value a stock fails to answer the most strategically urgent question: how are you going to do it faster than big hedge funds equipped with supercomputers and dozens of Ivy League analysts?
Behind this brutal competition is a simple truth: we can’t address a structural disadvantage without a structural solution, a tool that can actually go about cutting into the ridiculous informational advantage enjoyed by hedge funds and other big institutional players. Our founder, Oliver Schmalholz, decided to confront this problem head on way back in 2005. At that time, data-driven investing was just coming into view on the horizon. But Oliver was determined to get ahead of the curve: after losing $1 million in just a single day during the 2000 Dotcom stock market crash, he vowed to never let it happen again.
In the years since, data-driven investing has burst into the mainstream. We encourage you to check out some of the articles below. They’re all cataloguing the same fundamental trend: the rise of quantitative analytics in the stock market. Computers can crunch more numbers than ever before, faster than ever before, and it’s hard to find an industry analyst who doesn’t expect that fact to fundamentally shift the competitive contours of the market.
- The Wall Street Journal : " The Quants: Meet the New Kings of Wall Street"
- Bloomberg : "Quants are Eating Away at Wall Street's Edge"
- The New York Times : "Computers: The Next Generation of Hedge Fund Stars"
- WSJ : “The Quants Run Wall Street Now: …For decades, investors imagined a time when data-driven traders would dominate financial markets. That day has arrived."
If you’d like to learn more about how Quants change investing and how you can take advantage of the same, sign up for our upcoming training session:
How NQ Works
A conversation with a Nobel-prize winning financial theorist sparked the curiosity that drove Oliver’s original research. This investor had a simple insight with profound implications. Behind the vast sea of numbers, leading indicators, and valuation theories that drive market action, market movement is always associated with some sort of news event. That’s news event can range from the mundane to the headline-grabbing, just so long as it reveals new information about a stock that wasn’t previously publicly available. Earnings reports, M&A announcements, macroeconomic reports, new ratings by prominent stock analysts, research breakthroughs, regulatory approvals or denials—all of these things represent news events in this way of thinking. All these things have the potential to shift the way the market value a stock.
Of course, thousands of non-consequential financial events pass by every day, often with no detectable effect on stock price at all. The key to separating the wheat from the chaff lies in the data. For Oliver, the ingredients of a data-driven system founded on news event analytics came into focus:
- Real time subscriptions to a variety of financial news data feeds. This data needed to cover the crucial extended-hours trading sessions, when much of the immediate reaction to news events occurs.
- Even more granular data on “Analyst Actions”—stock price target changes issued by influential analysts. Every event needs to be sorted into a “Upgrade,” “Downgrade,” or “Neutral” to be usefully analyzed.
- Historical data on how individual stock prices reacted to past news events over various hold times.
- A team of developers to tie these resources together with live stock market data in real time and build a UI to make this integrated information usable by non-programmers.
After years of experimenting with this data on his own terms, Oliver arrived at a platform that could deliver consistent profits while limiting risk relative to traditional, buy-and-hold investing approaches. What’s more, the news-driven approach fulfilled his vow: he emerged from the 2008 stock market crash unscathed.
Since then, he’s seen his approach validated by academic studies that actually employed NQ’s data. A study conducted by a multi-university team of researchers from NYU, Rutgers, UC Berekley, and Tel Aviv University concluded that “News Quantified data helped researchers determine that news releases can help predict market performance not just in the following main trading session but throughout the subsequent quarter.” (Journal of Investing, Spring 2018 Edition).
When the leader of the study, NYU’s Dr. Joshua Livnat, was asked how long crunching the numbers would have taken without NQ’s data, he projected 1-2 years instead of 1-2 days. A retail investor could certainly develop an analogous system of their own. But it would take, conservatively, several years and several hundred thousand dollars.
We brought NQ to the market to democratize access to this trading toolkit and offer smaller investors a runway to data-driven profits without the expense of building their own trading system from the ground-up. It really is possible to find sustainable stock market profits without a $2000/month Bloomberg terminal.
NQ users do it every day.
We hold weekly virtual training seminars to help investors understand the fundamentals of news-based trading. We don’t put on a hard sell or hype any magical formulas. Instead, we explore a powerful, sustainably profitable strategy that’s finally accessible to smaller investors through the NewsQuantified platform.
Or, if you’re not quite ready for a training session, you can learn more by signing up for our e-mail list below.
After just 10 months of investing I am up over 55%. I finally have the confidence that we can retire comfortably in a few years time. This is the best decision I have ever made.
News Quantified is an industry leading innovator in measuring news’ impact on stock market activity.
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