Yao was not caught off guard when an army of retail investors assembled online and bought stocks that large hedge funds had sold short, thereby sending those prices higher and triggering losses for their more professional peers. That's because her firm had already been tracking the kind of data that several firms were scrambling for in February — and she says acquiring that kind of real-time analysis will hugely benefit savvy investors going forward.
However, another data input — on so-called network traffic — lit up at the same time, as mom-and-pop investors increasingly discussed the markets on Twitter, Reddit, and other online forums. In other words, being able to track, clean, and interpret that data ahead of time would have helped an investor avoid a last-minute scramble to find it. These processes are the bread and butter of Yao's firm and the algorithms they create. She strongly believes that classic models that rely on historical data alone will face more challenges in the future.
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