Utilizing 'Big Data' to Generate Alpha in Portfolios of Consumer Equities
- Thursday, November 13 from 3:30 to 4:30 in Room 552; Refreshments 3:00 in Room 502
The presentation will explore several kinds of new quantitative "fundamentals" that can be extracted daily from "Big Data", along with the challenges encountered while collecting and processing the vast amounts of data involved. The presentation will show how significant and consistent alpha can result from utilizing at least four of these new metrics. And the presentation will also demonstrate how to use "Big Data" tactically to anticipate revenue surprises -- before earnings reports, before guidance and in some cases even before corporate insiders fully grasp what is happening at the far end of their distribution channels
Richard C. Davis, President & CEO, Consumer Metrics Institute, Inc.
Richard C. Davis is the founder and President of the Consumer Metrics Institute. The Consumer Metrics Institute grew out of Mr. Davis’ frustration with the lack of timeliness and poor quality of information available to investors about the consumer economy in the United States. “It became clear to me that nearly all of the so-called ‘Leading Indicators’ available to investors were in fact no more timely or leading than last month’s account statements,” he says. “I also knew that data was already being collected that could allow investors to know how consumers are acting day-to-day. The only problem was developing analytical techniques capable of delivering that information several times per week.”
Mr. Davis’ interest in the development of technologies that empower investors started over 30 years ago. One consistent strategy utilized by Mr. Davis during his entire career has been to push the data collection process as far up-stream as possible, developing technologies that capture critical data as close to the original source as conceivable. The internet has finally made the capture of vast amounts of data about consumer economic activities on a real-time basis practical. Mr. Davis created the Consumer Metrics Institute to acquire and channel that information to investors in a timely manner.
A secondary theme throughout Mr. Davis’s career has been the development of tools to measure and analyze risks. “One of the broadest kinds of risk encountered by an investor is systemic risk, where the entire market, economy or financial system is under stress,” he says. “At the beginning of a downturn the investor may be encountering either a ‘market correction’, a cyclical bear market or a once-in-a-lifetime event – all of which look the same at the onset. The first should be attacked, looking for buying opportunities. But clearly the latter should be fled. How does the investor know which course to take?”
Under Mr. Davis’ direction the Consumer Metrics Institute has focused on turning upstream economic data into information that an investor can use to assess the scope of the systemic risks associated with the equity markets. “We’ve developed our indexes to help investors identify the possible severity of the economic events that are unfolding in front of them”, Mr. Davis says.
Mr. Davis graduated from college with a B.S. Cum Laude in Physics. Before founding the Consumer Metrics Institute, he held a number of positions, including founding principal of a NASD broker/dealer and registered investment advisor, and senior IT management positions with Fortune 500 firms. He even took a 5 year non-profit sabbatical, which included a stint as the CEO of an American orchestra. The results of the Consumer Metrics Institute’s research and development is available free of charge on the Consumer Leading Indicators website: http://www.consumerindexes.com.