Catch up on ALL the news - Online news from MSO.net's Net.Matters - June 2007

According to an article by Reuters (New York), investors, and especially hedge fund investors are increasingly turning to algorithmic computer programs to digest text data produced via newspapers, websites, journals, periodicals, legal documents etc. in a fraction of the time that it would take a person to do.   Hedge fund companies with significantly smaller headcounts compared to global investment banks are able to generate just as many trades.  Suppliers of the technology that can analyse these data streams are seeing a growth in business as well as media companies that provide machine-readable news.

Key phrases such as "lowers its outlook", "a weaker performance" or "improved performance" can be identified by the news mining platforms and enable hedge fund investors to act quickly.  Other investors use the programs to monitor developments over time and apply the data in more strategic ways.  News mining platforms can, according to the Reuters article be programmed to identify multiple strands of news from news streams (including websites) and rate them according to the integrity of the source.   A higher rating would also be given to terms listed on numerous news wires.   

The main drawback to relying on programs is that computers find it difficult to interpret double negatives, sarcasm and emotion - the amount of text and information (and the way it is presented) generated by blogs, chat rooms and online forums is problematic for computers.  However, investors are still keen to tap into this additional source of information and "static" data is now seen as only one aspect to financial trading.