Data Culture in Trading and Tech

Data is the starting point of everything.

The rhetoric that has been most prevalent in media revolves more around data security than data use. Ironically, data is important only if you know how to use it properly. While data security is essential, we start forgetting the significance of data and how useful it can be when collected and analyzed properly.

Data is essential when it comes to trading and investment. For example, Benjamin Graham, one of the famous contributors to modern financial analysis, maintains that in order to succeed, investors need to seek out information that others don’t have access to or don’t possess. A so-called principle of “value investing”, advocated by Graham’s disciple Warren Buffett, states that there are two ways to make money on the securities market: by possessing unique information or by evaluating common information differently from others.

Indeed, success on stock markets mainly depend on the information provided by companies, and the more transparent the information is, and the bigger the pool of that information is, the more chances the investors have to succeed.

The history of the most successful stock exchanges, first in Europe, and then, in New York, is largely the story of providing more accurate information to growth investors, and dishonest stock manipulation comes from false information.

That is why regulatory bodies that oversee and maintain fair, orderly, and efficient markets and flow and transparency of information are the investor’s best friends. Knowing that the information you are being provided is accurate makes investors more willing to invest.

Transparent information is good, but it is never enough. What you do with that information matters just as much, if not more. How one investor can interpret, and value information can be dramatically different from the way another one does it. For one investor, for example, the knowledge that the CEO is resigning may mean a downfall in stocks, while another one may believe it to be a new beginning for the company that will increase the price of stocks.

Data is not only important for traders, but for both emerging and long-standing companies. A recent report published by McKinsey found that data value depends on the way it is being framed and used in the company. The report argues that most companies miss their chance of growth because of an amateur use of data. There are three main stages of a successful capitalization of data:

1. Excellence in identifying, capturing and storing data.

2. Necessary technical capabilities to analyze and visualize that data.

3. Organizational order that can complement analytics with human talent and implement relevant insights produced from the data to the company structure.

Even though mainstream rhetoric talks sometimes about the use of data, the report goes deeper by stating that “data culture” inside the company is essential for a successful data analysis. A company can successfully develop a data culture by moving beyond specialists and skunkworks by framing data to support and advance the company’s mission, opposed to having data dictate the company’s overarching agenda.

Data, if used properly, can create a change. However, you need to have a solid foundation and to use the data gathered creatively for a company to grow above and beyond. And that is where a real challenge comes in.

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