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Smart Searches Find Their Way to Wall Street
June 19, 2006
The more information sources available in electronic form, the more difficult it becomes to sort through and make them truly useful. The issue is being addressed by a number of recent product introductions from search technology companies.
MediaSentiment, from California News Tech in San Francisco, collects news from over 12,500 Web sites--including those of newspapers, television stations and businesses. The product can evaluate the content in real time and deliver a summary to individual investors who subscribe. "Being the first to know has its advantages," said News Tech CEO Marian Munz. The company would not disclose subscriber numbers but said it is growing 30 percent per month.
The tool performs a statistical-significance analysis of an entire news article, and the result is highly correlated to actual market movements, Munz said. The positive and negative indicators have a 65 percent correlation to the direction of movement from the previous day's closing price to the next day's closing price.
Munz said the product is being marketed to retail investors directly and through partners like the Chicago-based brokerage PTI Securities & Futures, but News Tech also plans to sell it to larger brokerage houses for use by their trading desks.
In January, InvestorIdeas.com, a subsidiary of Port Roberts, Wash.-based Econ Corporate Services, began offering Media-Sentiment on its small-cap Web site and related portals. Also that month, Reuters-owned Equis International in Salt Lake City made the search function available as one of its MetaStock technical analysis tools. In March, PTI Securities added MediaSentiment reports to the newsletter it distributes every Monday to clients.
"It has an automatically updated chart on the movers for a particular day, giving them a thumbs-up or a thumbs-down rating," said PTI spokesperson Sarah McNabb. Media-Sentiment is not integrated into PTI's online trading platform but is available to customers through a partner section.
Other search engines that classify results include EasyAsk from Bedford, Mass.-based Progress Software Corp. and Recommind from a San Francisco company of the same name.
Larry Harris, general manager of EasyAsk, said the product is used by several brokerages such as State Street Global Advisors for internal searches. The firms use the technology to search for structured information in databases. Progress, which acquired EasyAsk in May 2005, is well known on Wall Street as a supplier of the enterprise service bus, a Web services technology from its Sonic Software subsidiary, as well as algorithmic trading systems through its Apama business.
Other customers of EasyAsk, such as retailer Lands' End, use the search technology to make it easier for online customers to find products. The trick is to use the way a company structures its internal information to organize the search, said Harris. "We see the unification of searching both structured and unstructured information as a big barrier," he said. "Take Google--they're coming at it from the unstructured, text side of the world. But when you look at it from the data side, probably the most refined information that exists is in Oracle databases. We see that as a great opportunity." As a result, EasyAsk is able to answer concrete, business case questions for users, Harris said.
Recommind CEO Robert Tennant said his company's search tool "pulls information from different systems and creates virtual objects--a little information from your human resources system and a little information from documents that you've written."
