The information environment has a huge impact on modern business. Being aware of the latest news and trends, being able to process data from thousands of sources is extremely important for investors.
Information is often either erroneous, or knowingly false, or untimely, and investors need to know what is what. Sergey Kartashov, CEO of the asset management company Generation Partners, tells us how to do it correctly.
Big Data is widespread in business now, and its potential benefits are receiving increasing attention from the investment market around the world. A large amount of collected data is stored and transmitted through new technologies and, along the way, change priorities for many enterprises. In its turn, new analytical tools are developing according to business requirements.
Modern technologies associated with Big Data make it possible to transform a mass of heterogeneous and unstructured data into information that can be used to improve the efficiency of the investment business.
Sergey Kartashov believes that Big Data allows you to structure, analyze and manage information. The purpose of using Big Data is:
- Improving the decision-making process;
- Risk management;
- Development of new products;
- Boosting profits, etc.
If the data is the new oil, then data analysis can be compared to its production and transportation. Managing information is important for investors when it comes to building a strategy and finding ideas without exposing capital to unacceptable risks.
Big Data makes it possible to obtain meaningful information from high-quality and trustworthy sources for making decisions, forecasting, modeling, and visualization.
Sergey Kartashov on auditing companies
After analyzing the problems, trends, and prospects of the market and directly identifying potential companies for investing, here comes the next stage – auditing the companies. There should be carried out financial, economic, marketing, and management audit. An investor should evaluate financial statements, management policies, the expertise of employees, age and location (jurisdiction) of the company. This is a comprehensive audition that focuses on the business plan and the long-term prospects of the company, benchmarking it in terms of profitability and risk.
After another selection of companies, when creating an investment portfolio, an investor should assess possible risks, both external and internal. The first ones include currency fluctuations, interest rates, inflation, and competition. The second ones are the risks within the company associated with the organization and management of activities and finances.
Sergey Kartashov notes that there are two types of companies: some promise quick and large profits, but have high financial risks, while others are stable or low-profit, but with the lowest possible risks.
It is important to diversify the portfolio—to distribute the assets according to the risk-return ratio. If you invest all your capital in one area, the risk of losing your funds is too big. As the saying goes, don’t put all your eggs in one basket. If you distribute capital among several areas of investment, the chances to lose money are minimal.
Using diversification helps to increase the level of competitiveness in the market, as well as increase financial efficiency and profit.