Making Finance Simpler and More Data-Driven for the Amateur Majority
Finance is an incredibly complex field. To thoroughly analyze even a single stock requires pouring over a plethora of technical parameters, earnings reports, balance sheet statements, and the like. Very few people can do this. They’re generally professionals, analysts, investors, hedge fund managers, and a few devoted amateurs. The rest of us usually pick mutual funds or broad-based ETFs to invest our money. These are the tools for the non-specialists.
If one is not a financial specialist, picking stocks is currently either a very expensive process because one must pay a professional, or a very haphazard one driven by anecdotal knowledge. Investing in a mutual fund still counts as expensive; those fees are often quite high. Hiring a financial advisor is even more costly. A huge amount of resources are devoted to this field. Thus we should consider whether it can be optimized. Even a tiny optimization, putting a small fraction of money managers out of work, would deliver massive savings.
There are excellent sites like Wealthfront and Betterment that help people invest their money. These sites are oriented towards complete finance newbies. Their ideal customer is someone who doesn’t have any opinions about markets. The only real variable that is customized per user is their risk tolerance; this is usually defined by their time horizons. But one variable is far too little for more sophisticated investors.
What about investors who read the WSJ but aren’t professional traders? What about investors who have vague opinions about markets, maybe they prefer certain asset categories over others, but can’t do a deep technical analysis? There are no tools for these people.
The current spectrum of financial help is binary. It’s for total neophytes and for experienced analysts capable of parsing highly complex financial data. But a huge segment of intelligent investors do not fall in either category. What they can’t do is easily express their opinions as portfolios, except in a haphazard way. Regular investors have no way to be competently data-driven as they pursue their own investment philosophy.
It should be easier to translate market sentiments into carefully crafted portfolios. What if I like value stocks in emerging markets, but I want to avoid the oil sector? These are vague opinions. But how do I find these stocks without delving into financial screeners that involve arcane metrics? There’s a huge learning curve there. This part can be automated.
ImpliedProfit.com is an upcoming service that aims to map market opinions into carefully tailored portfolios. It doesn’t invent market strategies. It takes existing ones, interpreted through the lens of everyday questions, and translates them into market positions. If it learns that you love Asian tech stocks, it can help you design a portfolio for that. Better yet, it can notify you of trades to make as the market changes. Maybe that growth stock you bought last year is now more of a dividend stock; if it’s no longer in line with your investment thesis, we can notify you to update your portfolio.
ImpliedProfit is simply a tool to make your trading decisions more data-driven. It’s designed to help you catch those niche opportunities, ones that fall in line with your personal investing philosophy, that you might have missed. The complexity of modern markets calls out for such a tool to bridge the gap between experts and amateurs.
If you’re interested in learning more, sign up here for updates about early access.
