Fred’s Got It

In Fred Wilson’s post today, titled Transparency, Markets and the Internet, he gets right to the point of how the dissemination of information has evolved and how the playing field will never be the same:

So that’s a quick trip through my journey toward the land of transparency in financial markets. The days of schmoozing the CFO so you can get the call before the other analysts is over. Put to its grave by the cleanup of wall street in the aftermath of the last bubble. So you have to get the facts some other way. It’s good that we have this thing called the Internet that is ideally suited to out every secret, fast forward every rumor, and route it to the very people who need that information to trade on it.

Schmoozing is out. Crawling is in. MBAs with a spreadsheet are a dime a dozen. But the kid who knows how to mashup 1000 rss feeds, tag them on the fly, and cross index them with the crawler he hacked the other night at three in the morning is in high demand.

While Fred focuses on the issue of increasing transparency and its great leap forward over the past decade, I’d like to comment on the other trend that mirrors this - the great leap forward in technology. Think about what we’ve seen since the late 1990s - the advent of advanced search, RSS, massive harvesting and ping aggregation and notification, advanced visualization and analysis tools for getting a handle on seemingly unmanageable amounts of data, tagging, social networks - the list goes on.

As mentioned in a prior post about the internet and investment, I make the point that we are witnessing a tectonic change in the way investors will seek to discover, analyze and act upon web data. Technology has now run so far, so fast that tools previously available only to governments and large corporations are available to all. This does, as Fred notes, increase transparency, and, in fact, the democratization of the investment landscape. The gap between the haves and the have nots is shrinking by the day, and the day will come in the not-too-distant future when true alpha - one created through investment skill and better ideas and analysis, be it human or computer-driven, and not through insider tips or cozy conversations off-the-record - is readily observable. This will be a great day for all.