Strateer Blog

People keep telling us, that hedge funds are very secretive and would never let anybody come close to their strategies.

Interestingly I heard the same before a couple of years ago when it came to CRM data. Back then the question was, would companies trust a hosted solution (e.g. Salesforce.com) with their most private and business critical sales and business development information. Turns out, that as soon as somebodye provides an easy and reliable solution to a pressing problem (I have experienced myself the pain of operating and customizing a CRM solution  and spending north of $500,000 on it) all other issues become secondary.

We believe the same applies to hedge funds when it comes to operating their technology. So while we are at it to provide a hosted hedge fund solution we will even take it one step further and make it that easy to use, that you don’t even need to be a hedge fund anymore - every investor is a potential customer to us. Howard Lindzon wrote a related post regarding Transparency and Reputation.

Today small businesses have access to hosted enterprise level CRM tools . Soon small investors will have access to hosted institution grade hedge fund tools. But providing tools is only the first step for us. Connecting investors and allowing them to collaborate and benefit from the crowd’s wisdom are the benefits that a hosted solution can offer.

Today Amazon released its Elastic Block Store into to public Beta (see here). We have been part of the private Beta phase (Thanks Jeff Barr!) for a couple of months.

So far our experience was excellent. The problem with Amazon’s Web Services was, that their virtual servers did not have persistent storage. That means if one of these servers went down, all local storage was lost. S3 - Amazon’s other storage service - is not very fast and therefore not suitable for storing the DB or other data that needs to be reliably persisted and accessible.

EBS fills that gap. It is an external storage volume that can be mounted to any EC2 server. When the server goes down, the storage volume is still availabe and can be reattached to another EC2. Using EBS we were able to build our entiry infrastructure on Amazon’s Web Service, which provides scalable infrastructure at our fingertips at the fraction of the cost that we would have to pay for dedicated datacenter resouces.

The NYSE released its newest set of statistics on program trading. This summer a quarter of all trades on the NYSE will be executed through Program Trading. That means the the buy/sell orders are initiated automatically by a computer program. Interestingly 100% of these trades are executed by institutional investors. The individual investor is left out here.

Many of these trading programs are dedicated to exploit price arbitrage opportunities and only work if they are highly leveraged. These programs lead to hundreds of trades every minute - sometimes even more. With prices from retail brokers between $4.99 and $9.99 per trade these arbitrage strategies are not feasible for individual investors.

However, the ability to automatically analyze market data and trade accordingly seems to be valuable to individual investors as many of these are struggling with a lack of time to follow the markets. Additionally, many individual investors tend to have no system on when to buy and - more important - when to sell. The interesting question for us is therefore: How can we leverage institution grade technologies to provide better tools that are optimized to the individual investor.

In the coming posts we will dig deeper into this question and show some approaches that we have come with.

Today is a big day for the team at Strateer: We are slowly starting the roll-out of Alerts4all.com by inviting a small group of friends and potential partners of the company to test Alerts4all.com. If all goes according to plan, we will start a larger private Beta in the next two weeks.

Thanks everybody for the hard work during the last weeks. Now with the first users arriving I bet things will stay busy around here.