By: Scott Davis
In our last piece on portfolio management we argued that the money management industry should take a step into the 21st century and adopt data and data analytics into their processes. In baseball, the data available is quite amazing and still most teams utilize just a small fraction of what’s available. And most teams don’t improve year-to-year, effectively only using data when it supports their case. Groupthink runs rampant in baseball. We see the equivalent in the money management industry in all aspects, and alpha generation is limited, as we all painfully know. My own history is full of mistakes where I ignored data and allowed emotion or bias to cloud my judgement. And I see it every day among our client base. So, this note explores how we might use data, combined with the art of our craft, to improve our hit rates.