What is the same?
“Technology is changing how information is created, processed and analyzed. In a financial markets context, new technologies, especially data analytics, are changing investor behavior and asset price dynamics. The entire financial industry is in the middle of a revolution. Previously cutting edge approaches to investing and trading are quickly becoming inferior – relics of ever-faster data-driven innovation.”
In 2023, this remains more true than ever, as shown recently by the capabilities of OpenAIs ChatGPT; and we will continue to move ahead on a technology focused path (including via using MarketReader technology that we are developing within our spin-out Market Reader Inc).
Somewhat ironically, new technologies allow us not only to analyze more data and gain more precise insights, but also to interact at a deeper level and more personal level with our clients. This is something we will pursue aggressively going forward.
What is new?
2022 saw the global economy hit with two historical shocks. First, the most dramatic inflation shock that we have seen for 40 years, and the related repricing of global yield curves. Second, the full-blown Russian invasion of Ukraine marked the biggest war Europe has seen since WWII, with dramatic implications for energy prices, and geopolitics for years to come.
Macro-driven investing was the winning strategy of 2022, and we are very proud to count many of the best performing macro funds as our clients. Discretionary macro decisions, based on intensive data-analysis and human conceptual thinking, have been able to deliver superior returns for investors in an environment otherwise characterized by losses in most asset classes.
The macro volatility will stay high in coming years, as ‘inflation changes everything’. The adjustment to a non-zero-interest-rate-world will be a multi-year process. Hence, the macro dimension of investing will remain crucial in coming years, and much more important than in period of easy monetary policy 2009-2021.
Linked to this, we are thinking hard about how to bring our world-class macro insights to a broader audience, rather than the niche audience of high-end institutional investors that have previously been our target (suggestions welcome!)
The bottom line. More and more investors will be forced to embrace both the technology and macro aspects of investing in coming years. That is the way to stay structurally ahead.
Founder and CEO
Exante Data Inc.