At Smartkarma, we pride ourselves on our community’s unmatched level of collaboration and our ecosystem of seasoned analysts, cooperating from across the globe to debate and provide unconflicted research insight into Asian markets.
We talk about what a unique resource this level of collaboration is to our readers. Smartkarma isn’t like other research providers in the space focused on selling disparate reports; these firms leave buyers helpless, and forced to navigate virtual malls stocked with endless shelves of homogeneous product. Smartkarma is different because it’s a think tank at its core; a dynamic environment for sharing insight, creating context and themes, and discovering great insights together.
Or, so we say…
It all sounds great on paper, an idealised vision that looks good in marketing material.
But is there more to it than that? Does collaboration from the world’s leading experts truly produce ‘market-leading’ insight? Or, is it just another clever marketing trick designed to cast ourselves in a different light than our competitors?
In this piece we speak openly about what collaboration looks like in practice, what it has taught us, and consider its implications beyond Smartkarma.
Let’s start by looking at a recent case study.
The Report
Pelham Smithers Associates “PSA”, a UK-based independent research firm with an expertise in Japan, recently published a report on Smartkarma titled “The Best Chart I Have Ever Seen….. Well This One Ranks High”.
The chart in question was a seemingly innocuous dataset from fellow Smartkarma Insight Provider, Amareos. PSA wasn’t exaggerating its significance though. The chart neatly displayed a possible breakthrough, a potential new leading indicator in the Japanese equity market.
The Findings
The focus of Amareos’ original article titled “Caveat Venditor” was on the outlook for global fixed income markets.
PSA saw the chart, which quantifies the “tone” of public perceptions around Japan’s economy in real-time, in the Amareos article posted on Smartkarma. It was a product of crowdsourced sentiment analysis derived from millions of mainstream and social media posts, created by the brilliant team at Amareos.
PSA’s recognised the pattern in the chart was highly correlated to a chart of the YoY relative performance of Japan’s biggest equity index, the Topix.
So, PSA decided to dig a little deeper.
They found that the two bore striking similarities. But more than that, their research indicated a steady and consistent change was occurring; a change that has been occurring slowly over the last 15 years, as social media rose from its infancy years into the powerful data mine that it is today.
The change they identified was a doozy.
PSA found that historically sentiment lagged behind the market. The “experts”, the great and the good, would begin to sell, and over time, this negative sentiment would permeate through to conversations taking place on “main street”. However, as social media’s uptake grew and the voice of the crowd got louder, the gap narrowed. And Narrowed. And now it has just crossed over.
As Ryan Shea, Head of Research at Amareos notes,
“Financial professionals have long understood that emotions affect financial markets in a predictable way but incorporating such inputs quantifiably into a research or investment process used to be impossible. Now, thanks to technological innovation the “crowd” can be objectively measured”.
Shea goes on to add:
“The organic collaboration between ourselves and PSA is very exciting. It shows that crowd sourced sentiments can be applied in numerous ways to help investors boost returns via alpha-generation or risk mitigation. What’s more the Smartkarma community of financial professionals provides the perfect vehicle to exploit this new data source”.
The collaboration that produced this insight is cause for excitement here at Smartkarma. This potential breakthrough would never have been discovered and shared without a community like ours. And critically, without a way to collaborate and share knowledge and expertise, PSA may never had been able to connect the dots drawn by Amareos. Their respective works would be no more than two disparate PDFs sitting on a virtual supermarket shelf.
This raises an interesting question. If a model exists that changes a competitive and protective industry like Financial Research into one where ideas (and the economics that stem from them) can be shared to help produce entirely new breakthroughs, can the same occur in other competitive, economically driven industries? For instance, Pharmaceutical Research, Material Science, or Renewable Energy?
A secure, technology-based platform that creates a collaborative environment for experts to publish and distribute their work, debate findings and opinion, and which fairly operates by sharing the economics of that research, must surely be a step in the right direction.
Written on 28 September 2016 by
JON FOSTER, Co-Founder of Smartkarma
