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True. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collec

True. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collecting that you're not* selling?"

fractionalhare 6y ago
This is a good heuristic for the sale of trading strategies. If someone has a viable trading strategy, they should be raising capital or joining a prop shop instead of selling it. But it's not maximally rational to trade on data instead of selling it if you don't have any experience trading.
- whatok 6y ago
  And even if you're somehow able to figure out a trading strategy on this with no expertise, there are extremely few data sources that are actually proprietary so alpha decay is a very real thing.
ed25519FUUU 6y ago
If the data made a few dollars per thousand dollars traded, it would take you a long time to make meaningful income from it, as opposed to a market maker.
AznHisoka 6y ago
Because sometimes the data is useful when combined with other data you might not have yourself. Example: you have data on number of Netflix subs. That’s great. It would be even more useful if you combine that with Netflix churn data. You can think of company analysis as a jigsaw puzzle. You may have a few pieces. That by itself isn’t useful unless u have the other pieces.
- whatok 6y ago
  What you're saying is correct but also puts a non-sophisticated seller in a poor negotiating position. They do not know what existing data the buyer uses or how their data can be complementary to anything.
  - ethbr0 6y ago
    That's why start-high and walk away is a fair opening gambit in negotiations of this sort. You can always come back around, but if they pursue you, that tells you something about their appetite.
    - whatok 6y ago
      I mean, I guess that's something that you can do but it's likely to get you laughed out of the room and greatly encourage them to reverse engineer whatever you were trying to sell.
      - ethbr0 6y ago
        So how would you play that scenario?
- logicslave 6y ago
  This works in theory, but in practice when you start making estimates of engagement numbers that are twice removed from the underlying stock price, you get into trouble. The deeper you get away from a direct relationship to stock price, the harder it is to predict something in practice.

True. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collecting that you're not* selling?"

fractionalhare 6y ago

This is a good heuristic for the sale of trading strategies. If someone has a viable trading strategy, they should be raising capital or joining a prop shop instead of selling it. But it's not maximally rational to trade on data instead of selling it if you don't have any experience trading.

whatok 6y ago
And even if you're somehow able to figure out a trading strategy on this with no expertise, there are extremely few data sources that are actually proprietary so alpha decay is a very real thing.

ed25519FUUU 6y ago

If the data made a few dollars per thousand dollars traded, it would take you a long time to make meaningful income from it, as opposed to a market maker.

AznHisoka 6y ago

Because sometimes the data is useful when combined with other data you might not have yourself. Example: you have data on number of Netflix subs. That’s great. It would be even more useful if you combine that with Netflix churn data. You can think of company analysis as a jigsaw puzzle. You may have a few pieces. That by itself isn’t useful unless u have the other pieces.

whatok 6y ago
What you're saying is correct but also puts a non-sophisticated seller in a poor negotiating position. They do not know what existing data the buyer uses or how their data can be complementary to anything.
- ethbr0 6y ago
  That's why start-high and walk away is a fair opening gambit in negotiations of this sort. You can always come back around, but if they pursue you, that tells you something about their appetite.
  - whatok 6y ago
    I mean, I guess that's something that you can do but it's likely to get you laughed out of the room and greatly encourage them to reverse engineer whatever you were trying to sell.
    - ethbr0 6y ago
      So how would you play that scenario?
logicslave 6y ago
This works in theory, but in practice when you start making estimates of engagement numbers that are twice removed from the underlying stock price, you get into trouble. The deeper you get away from a direct relationship to stock price, the harder it is to predict something in practice.