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Invest Like the Best with Patrick O'Shaughnessy
Michael Recce – Tim Cook’s Dashboard - [Invest Like the Best, EP.91]
Conversations with the best investors and business leaders in the world. We explore their ideas, methods, and stories to help you better invest your time and money. Hear stock market and boardroom insights you can't find anywhere else. If you're a professional investor, CEO, entrepreneur, or business strategist, this is for you. Explore all our episodes and learn more at https://www.colossus.com
Show Notes
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My guest this week is Michael Recce, the chief data scientist for Neuberger Berman. The topic of our conversation is the use of data in the investment process, to help cultivate what is commonly referred to as an information edge.
I call the episode “Tim Cook’s Dashboard” because of an interesting question that Michael poses: if you armed the best apple analyst in the world with Tim Cook’s private business dashboard, what might that be worth? Effectively Michael’s goal is to recreate the equivalent of a company dashboard for many businesses, helping analysts understand the fundamental health and direction of companies a bit better than the market does, and in so doing create an actionable edge.
This is a daunting task, and you will hear why. It requires both a fundamental understanding of business and of data, statistics, and methods like machine learning. In our own work, we’ve found machine learning to be useless for predicting future stock prices, but extremely useful for other things, like extracting and classifying data.
This conversation can get wonky at times, but as listeners know that is the best kind of conversation, even if it requires a second, slower listen. I hope you enjoy this talk with Michael Reece. Afterwards, I highly recommend you invest the time to read a series of posts called Machine Learning for Humans, which I will link to in the show notes. It helps demystify the buzz words and explain how these new technologies are being used.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Books Referenced
Crossing the Chasm
One Two Three Infinity
Links Referenced
Sam Hinkie Podcast Episode
Show Notes
(First Question) – Changes in data science through the lens of Michael’s career
– The basic overview of using data and machine learning to create an edge
– How the state of business is more than just a single data point
– How you know when you’ve pulled a real signal from the noise of data
– The advantages that data provides
– Is there still an edge in decaying data
– Building data that would predict stock prices
– Prospectors vs miners in data mining
– Knowing when your prospectors are on to truth
– Understanding machine learning
– Defining partition
– Applying the parameters of selection process to stocks
– What’s the first step people could take to use data and machine learning to improve their investment process
– Building a sustainable advantage within data science
– Predicting the uncapped positive vs what’s seemingly easier, eliminating the negative
– How do we know to stop using a signal
– The importance of asking the right question
– Categories of objective functions that are interesting to measure data against
Crossing the Chasm
– Most exciting things he’s found with data
– What investors, individual or firms, has impressed him most with their use of data
– Will everyone eventually shift to being data informed or data driven
– Wall Street’s use of data vs other industries
– Sam Hinkie Podcast Episode
– Why everyone should know how to code
– Kindest thing anyone has done for Michael
– One Two Three Infinity
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag
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