Trading in some investments genuinely has been democratized. However, access to the information people need to make trading decisions has not.
Researching Investments used to be a pro sport
I have written before about how the world of investment related information has changed: https://the-perspective-pool.scriber.to/article/the-reason-we-built-scriber. Since the advent of the smart-phone in particular - the iPhone hit the market in 2007 - access to information, investing and other services has been transformed. The news at the moment all seems pretty grim, but in 2009, when I started thinking about what would ultimately become Scriber, the world was different:
central bank actions to stop a financial meltdown were at the top of the news,
Joe Biden was Vice-President,
the US and its allies had massively increased troop numbers in Afghanistan,
Russia had launched a surprise invasion of Georgia and annexed two of its regions,
and became possible to take a direct flight between mainland China and Taiwan for the first time in 60 years.
The world of financial research and data was a specialist sport played only by people who worked in financial services and was entirely invisible to everyone else: it was not (and still is not) possible to find the research that investment professionals use on the web. Professional and specialist research resides on closed platforms, designed - and priced - for professional, institutional users, such as Bloomberg, Refinitiv and S&P Global. There was literally a closed loop of information within the financial world: only professionals produced it and only professionals consumed it; in those days it made sense to play the entire investment game behind closed doors - it was complex, expensive, expert stuff - who else would possibly need access to it?
Power to (all) the People
The transformation in the demographics of investing has been rapid and dramatic. Armed with smartphone distribution, disruptive technology has put the ability to trade shares, futures, options, FX, and crypto in to the hands of at least 300 million people who have a trading account. That is before you include all the people who care about how the financial world works because they have a self-invested pension, a 401k, a mortgage, run their own business, or take a pro-active interest in their and/or their dependents’ financial position.
Trading in some investments genuinely has been democratized. However, access to the information people need to make trading decisions has not. Professionals and the new class of semi-professional investor use very different tools for accessing insights: the professionals use Bloomberg, Refinitiv, FactSet, CapitalQ and other systems to access professional insights. Everyone else relies on Google and social media.
But - ironically - now so do professionals: Twitter is a venue for serious thinkers and a vehicle to build an investment or business track-record in public. And even the Discord - a social platform designed for gamers - hosts a thriving community of investors and commentators. And as we at Tellimer know from our institutional clients, professionals turn to Google to find difficult to find information and expertise.
While investing remained a rarefied and exclusive activity, finance professionals used to enjoy a huge information advantage over everyone else. However, the era of access to investing has created a new information asymmetry - perhaps counter-intuitively - that creates a problem for professionals as well as the new classes of semi-professional and democratized investors. Because there is a hard, opaque barrier between the professional networks - which are very good at what they do but were designed and built for the old world and have proportionality less access to unique information than they did - and the growing pool of expertise in the wider economic environment, both are separated from each other, to everyone’s detriment. Information is still too hard to find.
More To Invest In - Less Research
A feature of the rise in technology is that it has grown along side - and arguably actually created - new asset classes and themes for investment: not just DeFi, but all the complex dimensions of ESG, alternative energies, food production, cleaner extraction industries, alternative energies, evidence based ethical investing and procurement, e-commerce, food delivery apps, online shopping, super-apps, electric vehicles and also the economic rise of large developing economies such as China, India, Brazil and many others. There is much more to understand than ever before, and less and less coverage of it all from the traditional world of finance.
Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest.
Veteran investor Warren Buffett
It should be possible for a single person or small team, with big firm experience or equivalent quality to reach anyone who is searching for guidance on how to think about their personal - or professional - investments/economy/business. Much as everyone who needs it should have access to sophisticated thinking on financial and economic matters, but the traditional community of finance also needs new and different sources of expert information as well.
Traditional Finance meets the Creator Economy
The creator economy - in which individuals rather than platforms have control of their editorial agenda - now permeates a number of industries: journalism (think Substack or Medium) e-commerce (think Shopify), music (think TikToc), TV (think YouTube) and fashion (think Instagram): “influencers” have not brought an end to the platform model - the FT, WSJ, HBO and even Netflix still exist - but have added to and changed the landscape forever.
The opportunity exists to give the increasingly savvy population at large as well as the frustrated professional audience access to the right expertise. The new democratized creator model will not replace the old, but rather interact with it in a controlled way: users of professional systems will still use those systems, but need more access to more and different information. Individuals will value high quality access in accessible forms. The new wave of tech will transform access to financial, economic and business expertise: the creator economy will provide selected permeability to the hard structural barriers that currently separate expertise and demand. It will;
enable the organized recovery of investment insights and specialist expertise from whoever has it,
lower the entry point for everyone to access to high-quality sources of insight, which have hitherto only available to professional investors, and
diversify the number of valuable sources of insight, perspective and specialist information available to professional users.
The free-for-all romance of a Web3 world in which everyone owns part of the internet may not quite come to pass, but it is entirely realistic to think of a world in which more professionals and experts have the ability to monetize their expertise without the need to be employed by a huge company. That still sounds like freedom to me.
Financial Markets and Asymmetric Information https://www.investopedia.com/ask/answers/042915/how-do-financial-market-exhibit-asymmetric-information.asp
Trends in the Creator Economy https://neoreach.com/creator-economy-market-size/
Creator tech stacks https://www.shopify.com/blog/creator-economy-tech-stack