The DI Wire is a dedicated platform that provides accurate and timely information for the advisor-sold non-traded direct investment industry. Our news publications are meant to reach and inform everyone interested in financial news about possible direct investments that benefit both the readers and the industry’s continued growth. As we provide our financial experts with the necessary tools, we understand that our news may sometimes affect your investment. Let’s talk about how.
Innovations in Information Technology
Advancements in technology have enabled people to access news as soon as they happen. The DI Wire can generate and disseminate information in real-time to its investors and other types of market participants. Access to this kind of high-speed information helps us to accurately understand how investors react to news and how it directly affects the finance sector.
Studying news and identifying how it directly affects the market locally and globally has always been an uphill task. However, recent advances in natural language processing using computers have made it easier to understand the difference between good and bad news.
The Role of News on International and Local Markets
The paper “The analysis of world events and stock prices” by Victor Niederhoffer, published in the Journal of Business in 1971, was one of the first to attempt to assess the impact of information on financial markets. The author concludes, “I hope that this study will stimulate other quantitative research on the effect of information on markets.” Since then, the field has taken off.
Preliminary work in the field relied on basic information performance measures like simple count data of newspaper articles. In recent years, the fields of forensic linguistics, natural language processing, pattern recognition, and economic finance have grown exponentially.
Recently, an IMF research project on how natural language processing affects international assets came to the attention of the DI Wire. Over 4 million articles covering financial news published by Reuters between 1991 to 2015 were assessed using text mining techniques to identify the impact of both positive and negative news on the market. The study confirmed that media tone directly affects investor sentiments towards certain investments and therefore affects market prices.
Perfect vs. Imperfect News
Perfect news is regarded as a situation where market participants are accurately and timely informed before making decisions on their investments. It occurs when the direct consumers of information are aware of available products, their quality, prices, etc.
Imperfect news, on the other hand, occurs when there’s misinformation that leads to poor decisions by investors, which directly affects the market. This may lead to an imbalance in supply and demand, thus causing market failure.
Financial news affects the global market harder than it does the local market. The DI Wire understands that consumers need to have all the facts before making a decision on a particular product. Perfect information is inherently difficult to achieve, but we know that an efficient market cannot survive without one.
Importance of Information When Making a Decision
Equipping you with all the facts is precisely the DI Wire’s job. Our information consumers will be able to make the right decisions about their investments. For example, assuming a man named James is looking to buy a new company will meet with the seller to discuss the terms of the agreement.
The business might appear lucrative to anyone, yet the seller is in a hurry to close the deal. James conducted his due diligence and found out that the company is actually in debt. Having all the facts helped him decide that he no longer wanted ownership. However, if he had walked into that meeting while misinformed, he would have suffered substantial loss.
Media outlets do have an impact on their information consumers. If a consumer isn’t exposed to perfect information about the merits or demerits of a product. In that case, it may lead to terrible decision-making strategies, which directly affects the outcome of the financial market.