Information for Algorithmic Trading: Perspective from Jeff Bezos and Wilbur Ross
Wednesday, March 24, 2010 at 8:05AM
Michael Bigger
Written by Michael Bigger. Follow me on Twitter.
 
 
Recently, Jeff Bezos and renowned investor Wilbur Ross discussed information. Their views about information made us think about how to incorporate information into our algorithmic trading strategy. Let’s examine what they said and then examine the meaning of this for algorithmic traders. 
 
In this blog post, I discuss "Innovate the Amazon.com's Way". In the Harvard interview, Jeff Bezos made the following observations about information: 
 
1. Information perfection is on the rise.
2. Information costs are going down.
 
In the March Issue of Fortune Magazine, Wilbur Ross, in addition to reinforcing the points made previously, adds his own observations:
 
1. Market information is timely.
2. Market information is abundant and overwhelming.
3. Market participants have not demonstrated more ability to gain meaning from more information.
4. Therefore, the value of the expertise and ability to interpret this mountain of information goes to infinity.
 
The implications these statements have for algorithmic trading are profound. Embedding the expertise and ability to input and interpret a vast amount of information on a timely basis into an algorithm will be a significant source of value creation for algorithmic trading. It has never been cheaper and easier to access the internet information reservoir. The big value will be derived from developing some astute ways to interpret it. We are working on this. Are you?
 
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