Day 1: Preparation Phase (Workspace Setup)


 

Okay, let’s start. First and foremost, you have to choose and set up an investment platform that is essentially an online service which allows you to buy, sell and hold funds.  Having 24/7 online access also allows you to view and monitor the progress of your investments at any time. It’s important to note that there is no ‘ultimate’ platform. It all depends on what type of products you’re looking to hold, how you want to manage them, what service you’re expecting and what you’re looking to invest in (see Appendix C). The robo-advisor route is a great way to start investing as a beginner [74]. Available robo-advisors (Fidelity, WealthSimple, WealthFront, Betterment, Ellevest, etc.) can sometimes be less expensive than hiring a financial advisor. Then you need to setup a brokerage service account to store and save funds for investing (Vanguard, Fidelity, Charles Schwab, Public, etc.). You should invest at low costs and get access to useful tools. Make sure that buying and selling investments can easily be done on your laptop, tablet or mobile phone. Ideally, your investment platform should include the following options: real-time streaming rates, key figures and consensus on more than 10000 funds, compare shares with each other or with the index, overview of call/put options, and tens of thousands of options without additional costs. You can get the stock data using popular data vendors such as Bloomberg or Nikkei Market Data. In addition, it is easy to fetch data using Python/R scripts, and so I/O files can be converted to different formats such as excel or CSV files (see Appendix C).

Generally, you may want to consider the following available data mining options [1]:

1. Open-source market data like Google Finance, finance.yahoo.com or ycharts.com;

2. Corporate filings (the company's balance sheet, future outlook, etc.);

3. The Electronic Data Gathering, Analysis and Retrieval (EDGAR) system;

4. The company's website (annual report, financial statements, stock info, etc.);

5. The company's annual report to shareholders and annual meetings to elect directors;

6. Research reports from Yahoo! Finance, brokerage, banks, independent analysts, etc.

Data Mining tools are software programs that help in framing and executing data mining techniques to create data models and test them as well. It is usually a framework like Python scikit-learn, R studio, G-suite, Oracle, IBM SPSS or Tableau with a suite of programs to help build and test a data model. There are many tools in the market both open source and proprietary with varying levels of sophistication. At the root, each tool helps with implementing a data mining strategy, but the difference lies in the level of sophistication you the customer of these software needs. There are tools that do well in a specific domain such as the Financial domain (see Appendix C).

So there you have it, an impressive list of comprehensive tools and frameworks that help you build an investment data ecosystem to derive value out of your investment products.

Comments

  1. VA DigHiSciFebruary 2, 2022 at 8:41 AM

    This is about the stock data mining options:
    1.Open-source market data like Google Finance, finance.yahoo.com or ycharts.com;
    2.Corporate filings (the company's balance sheet, future outlook, etc.);
    3.The Electronic Data Gathering, Analysis and Retrieval (EDGAR) system;
    4.The company's website (annual report, financial statements, stock info, etc.);
    5.The company's annual report to shareholders and annual meetings to elect directors;
    Research reports from Yahoo! Finance, brokerage, banks, independent analysts, etc

    ReplyDelete
  2. VA DigHiSciFebruary 2, 2022 at 8:42 AM

    Focus on selection of the appropriate investment platform and exploring investor online databases, stock APIs and related investing data sources that can help you create investor lists based on industry, investor type, etc. The key question to answer is what’s the best platform for me?

    ReplyDelete

Post a Comment

Popular posts from this blog

Heads-Up: Upswing Resilient Investor Guide - Min(Risk) Control

Image
  Credit ratings  of companies and countries are most popular universal tools for helping investors to gain insight into different investment environments and to understand the risks and advantages these environments pose [1]. Globally, there are three main ratings agencies that provide credit ratings: Moody’s, S&P, and Fitch. Figure 1 gives an idea of the different rating symbols that Moody's and Standard & Poor's issue [1]. These ratings are considered to be investment grades consistent with the TLS Red “Junk”, Amber BBB and Green (A, AA and AAA) scores. For completeness, it is worth mentioning the monthly Zacks Stock Rank [18] that will help you find the best mutual funds to outperform the market. The Zacks Industry Rank is the average Zacks Rank  for all companies within a specific industry group. Most risk ratings determine the enterprise risk which consists of the business risk (volatility of cash flows) and the financial risk of the capital structure. A firm with
Read more

Appendix B: More Real World Examples

Image
  Risk/Reward Ratio Let’s consider the following example to understand RRR. Investor A wants to create a balanced portfolio using the following input data: Asset Value 10000 Accepted Risk 0.1 Time Period Y 1 Predict Growth 0.2   This is about investing $10000. He is willing to accept 10% of the risk with the expected 20% of the return on a short-term investment of 1Y. He shortlisted the two stocks, AAPL and MSFT, at the current prices $157 (AAPL) and $330 (MSFT) per share. He analyzed both stock trends using historical market data. According to his stock BI analysis, the predicted AAPL share price range is $100-200, whereas the predicted MSFT share price range is $300-400 in a period of 12 months: Stock Current Price Stop Loss Target AAPL 157 100 200 MSFT 330 300 400
Read more

Max(Reward) Control

Image
   At the end of the day, we are interested in measuring the probability of gaining max(Reward) from an investment. In doing so, we calculate Return on Investment (ROI) as follows [1,3]: ROI=[(Net Return)/Cost]*100%= (Capital Gains)-Commission+(Dividend Yield) and Annualized ROI = [(1+ROI)**(1/n)-1]*100%, where n is the number of investment years.   It is clear that the negative values ROI<0 mean that total costs are greater than returns (red score), whereas positive values ROI>0 indicate that net returns are positive because total returns are greater than any associated costs (green/amber). Even though ROI is a direct measure of profitability, it does not adjust for risk. Both ROI and Return On Equity (ROE) are popular measures of financial performance and profitability [1]. While ROI is total profit divided by your initial investment ,  ROE, on the other hand, measures how much profit a company generates when compared to its shareholders' equity.   Because shareholders'
Read more