Beyond Excel

Why is finance so dumb?

In the era of smartphones and 3-D printing, financial analysis is stuck in the ‘80s. The principal tool of the analyst is the spreadsheet—something that Lotus 1-2-3 popularized in 1983. While our PCs can access cloud-based massively parallel computing, our spreadsheets still have the same machine-code A1 cell-structure. The most advanced Excel function is a macro.

So finance hasn’t moved past summing up columns and rows. Big data and XBRL should make real-time analysis of corporate financials possible, but spreadsheets aren’t granular or fast enough. And getting programmers to work on such analysis is hard. The way to lure competent coders away from Apple’s and Google’s cool campuses has been to dangle a big check in front of them—the kind that only hedgies and Wall Street can afford. And then all they do is algorithmic trading.

But hopefully this will change. We can design web-sites without HTML; we can build databases without C++; there’s no reason why we shouldn’t get real-time estimates of Wal-Mart sales using feeds and tweets without depending on a few computational finance gurus to program in Matlab and Simulink.

Get ready: the future of finance is the Twitter-feed balance sheet.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-11-15T11:29:57+00:00 November 15th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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