This mission statement has been a long time coming, hopefully it was worth the wait as it is the most important piece we've published so far. It's finally time to become more specific about our goals and vision. As soon as it makes sense to do so, we'll follow-up with a progress report specifically about product development.
elfetica finance & engineering was born out of a bold vision. Due to the fact that brokers, banks, hedge funds, etc. (aka 'the big guys') have a vast, and frankly unfair, advantage over retail investors and traders like you and me. After careful analysis, we've concluded that roughly 80% of this advantage can be negated or, more precisely, given to everyone by using modern software engineering and offering the resulting products at a fair price. While there are many financial software products on the market, they tend to be (very) expensive, (needlessly) complex and and/or based built for specific trading styles. This doesn't even start to consider all the 'proprietary' stuff snake-oil that is being pushed onto unwary customers - something which is easy to do considering that, unlike almost every other aspect of investing, there are few if any regulations covering it (and that's fine with us - though the claims being made aren't necessarily). These are just a few of the problems we've identified with the market, but enough to put our minds together and think of a solution. Not a magic bullet - or a quick fix - mind you, but something that should get the industry's attention. (Luckily for us, and for you, it almost certainly doesn't and won't until it's too late.) If you currently use a proprietary software product that you enjoy, please contact us. We're not here to claim we have a solution for everyone - at least not for quite some time - but we'd love to know what and why you like a product. To be clear (and fair), nobody is claiming that said products are inherently bad, let alone useless. Some of them actually excel at specific things, while others meet the needs of certain investors. The one thing we do take issue with - pretty much universally - is their price. On a more personal note: their just not our cup of tea.
We intend to, and with your help will, do something different from all of the above: we want to provide software that, in due time, will cover all aspects and methods of trading while working regardless of your particular investment style. It's an integral part of our vision not to force any particular style or method upon you: the decisions are left up to you. Which begs the question: is it really a decision if it's based on incomplete knowledge? We don't think so, and neither do the aforementioned big guys. At this time we're a few dedicated individuals with a vision and one guy (me) doing all of the heavy lifting. That obviously limits our ability to (quickly) deliver on our vision. We hope that, once you'll see our first product - which albeit modest should be extremely useful to a lot (if not most) investors - we will have you (and your friends) as customers. That's all we need to bring you more and better products faster.
In a nutshell, our first goal is to build tools that enable you, and everyone else, to make informed decisions based on the wealth of hard data that already exists, and is available at no charge, without wasting precious time. Considerable time and effort goes into analyzing a company and, more often than not, people (ourselves included) skimp on said effort (anyone studying a minimum of 10 years of 10-K filings before every investment decision?). After all, those with the money have dedicated analysts for that purpose alone. But there's a lot more to our vision than that: while, at this time, delivering on this promise is our highest priority, that's just the start. We urge you to keep reading - and to give us your input - we're driven as much by what we need as by what you require. We've outlined a clear path, which we intend to follow, in regards to everything from products, pricing and development. We're not here to make a quick buck, we're here to stay, and earn your loyalty by providing you with useful tools at a cost anyone can afford.
Let's face it, no individual can compete with the resources at the disposal of the big guys. Among other things, said resources include proprietary algorithms (that actually work and are custom-tailored), automated trading systems as well as plain old man-power: everything from specialized analysts to the best computer programmers money can hire. A veritable financial army made up of every resource they, or someone at their service, could think of and serving one sole purpose: getting an edge up on everyone else. Coupled with virtually limitless financial resources, you have the average 'Wall Street' trading shop (obviously, styles, resources and sophistication differ wildly but it's safe to say even the smallest have vastly more of all than you and me). On top of that, they can count on the collective experience and memory of 'their' people, time-tested strategies and, unlike the Hollywood version of an institutional trader, at least to some extent (by virtue of not trading with their personal resources), cool heads (I'll write more about this factor in another article). All of this results in the ability to have a deeper, better and faster analysis of any given company, industry or market. Basically, their decisions are rational, while you and me are playing a guessing game. It goes without saying that nothing of the above is illegal or even unethical - that is unless you consider capitalism unethical per se. After all: if you had the possibility, wouldn't you do the exact same thing?
Life isn't fair and neither are the market odds. Which, to us individual investors means that we have to work a lot harder - or be a lot luckier. The odds are heavily stacked against us - anyone telling you differently is either not being honest or has an agenda. Point in case: one of the very few market-beating methods is simply following the actions of any consistently outperforming manager, even a quarter late. I'm not saying that their resources are the sole reason - otherwise everyone would consistently outperform the broader market - but it's difficult to imagine that they not a significant factor. More importantly as far as we're concerned, it's simply impossible to claim we 'bagholders' aren't heavily weighed down by the lack of them.
In a way this is an outright act of betrayal by everyone from 'our' bankers and politicians to the very ideal of capitalism. We've put our faith, and capital, into the financial system, reassured by the fact that institutions like the SEC will ensure a level playing field. Turns our that our faith was misplaced and that, whatever the regulatory agencies do, it's not defending our interests. Turns out we'll have to do that ourselves. All of us, and here at elfetica finance & engineering we intend to do our part. We are on a mission to change this state of affairs in order to level the playing field and even the odds. Do we think we can ever achieve complete parity with the institutional investor? No, but we can reduce the disparity by about 80% according to our estimate. While it will take time, effort and your support (in whichever form), it is something we can do - together!
Deep down, we all want to, or were taught, to believe that good choices lead to good outcomes, but that only works when we're all playing the same game and using the same and everyone is subject to the same rules and limitations. Turns out that's not the case when it comes to financial markets. At best, we play in the minor league - against the major league. At worst we play a round of Monopoly while the majority play chess - and, most of the time, we don't even realize it. Actually, the fact that you and me can still make money is amazing. I'll leave politics to the politicians, because I don't believe politics can solve this problem (though they are perfectly capable of creating them). Technology has a much more chance of doing so, and in 2020, fields like artificial intelligence and machine learning, have finally become accessible to everyone, holding great promise for a number of applications.
Obviously, there are things we cannot change. Take, for example, the (perfectly understandable) personal connections between big investors, or the extremely fast trades executed by automated trading systems ('bots'). These are not things that can be solved simply with some clever programming. Yes, we can create a community of investors (and might do so), but I can guarantee that no big player is ever going to spill his 'secrets' there. To use an analogy: given the choice, would you rather go to a single game of golf (or whatever) with a group of good players (in the financial industry) or get a lifetime membership to the leading investor's club? In these - and a number of other - areas, it's next to impossible to alter the status quo. The banks are another burden: in most countries, they charge outrageous fees and may not offer certain stocks (e.g. OTC stocks, companies listed in Asian exchanges, etc.) and products (certain funds and structured products). Some of us can't even short stocks! While this is a problem that can be ameliorated by yourself - if you've got enough patience, it is outside the realm of software engineering. That's why I've said that we can reduce the advantage of institutional investor's by approximately 80%. Some things are either up to you, or are simply not accessible to the average guy.
Still, in 2020 there's simply no reason why individual investors should be de-facto 'bag holders'. If you don't think this is true: just look at the variety of indicators based on the number of 'odd lots' traded. The assumption is that only we, the small guys, purchase odd lots (instead of 100 shares per trade). The conclusion: do exactly the opposite and follow the 'smart money'. The financial industry is a racket - moreso in Europe than in the U.S. but no country is immune - and, for a long time, you simply had to accept that and work twice as hard to make a profit. The technology to change this has been around for a long time, but it seems nobody had an interest - or the understanding - to tackle the problem. Why? I'd like to know myself. Yes, it's an ambitious goal, yes, it does require both technical and financial know-how, but those reasons have never stopped people from developing and engineering complex software of all sorts. Thankfully, today amazingly powerful programming languages (not 'just' Python) are at everyone's disposal, along with incredibly powerful computers (if you don't know what I mean, look up the C64, or cosider that the Voyager twin-probes run on 4 banks of 16kb memory). A vast repository of information (the Internet) is available at our fingertips, so there's simply no excuse to accept current way of trading. After all, this isn't rocket science and algorithms aren't magic. Not to mention that a lot of what institutional investors do, doesn't actually work very well in the first place. As Occam's razor dictates (beware of bad translations, and worse interpretations) the things that work are (relatively) simple and yet, for the average investor, they're still out of reach. Just think about the time required to do a thorough fundamental analysis of a given company - time that's not spent trading. It doesn't have to be this way!
While solving these problems isn't rocket science, they aren't trivial either. Actually it is a formidable challenge for someone who, for the time being, works virtually alone and has no financial resources worth mentioning. But it can be done. It will be done! Keep in mind that I need these tools (plural) myself! At this point I don't want to give away too many details (after all the work done so far, I'm a bit paranoid that someone - with more resources - will steal our concept if given the chance), but let me say this: we'll be starting small and expand until we've covered a laundry-list of detailed (and carefully planned) applications. This roadmap even includes some 'esoteric' tools that may or may not give you an edge in trading. Our willingness to go into controversial areas, is a good example of the philosophy behind elfetica finance & engineering: we want to provide tools for every kind of trader - we don't want to tell you how to conduct your business. What some may regard as useless, misguided or stupid, others use successfully every day. We firmly believe that each trader has his own, unique, inclinations and, by extension, trading methodology. And that is how it should be. It is not our role to say what's proper and what's not. We also believe that intelligence and discipline are a trader's biggest assets and software that, at the end of the day, simply tells you when to buy and when to sell, takes those away these precious assets. Even worse: it gives you the impression that they are worthless and, as such, not worth pursuing.
At this point I should mention that we'll often release a tool in its infancy (v1.0.0), having only the core functionality, so you can asess its potential value to you. Given time, we'll develop it to its logical conclusion. Currently, we intend to offer each successive version (having more features) at a higher price than its predecessor. This business plan encourages early buying (and thus supporting further development) at a very low price. As promised, our tools will always remain affordable to everyone, but if you like the idea you can save money by buying early (details will be published along with the software itself). Anytime you purchase a given tool from us - regardless of how far into development it is - we guarantee that you will receive all further updates (at least up to a specified version). In other words, if you think a tool has potential and have faith in us, do everyone a big favor an purchase our software in its infancy. We hope to create a symbotic relationship with our customers: we give you a great deal and you give us a little capital - and a lot of motivation - to work harder. But, if you'd prefer to wait until an application has reached maturity (generally v2.00) that's OK too. Just be aware that you'll end up paying more - and helping us a bit less - than early birds. We can't promise that things will stay like this forever, but for the time being, that's how we intend to conduct business. Regardless: in the first place we want - and always will want - happy customers! If you have comments on this matter please don't hesitate to contact us.
That brings me to the second point: we aim to provide you with tools. Not more, not less. Like any tool (e.g. a hammer), in the right hands it is extremely useful, and can be used to create countless beautiful things. However, by itself, the tool will not magically create anything. We are not in the business of 'magic, proprietary' formulas, systems or software. Why so many companies continue to do so (for hefty sums), is another something we've been wondering since the beginning of this project. It is the sort of questions that keeps me awake at night. Obviously, there's both a demand - which is understandable - and a - completely irrational - belief that such programs actually work, and produce outsize results. (If anyone has been economically successful with such applications, or takes issue with our wording, please get in touch! We'd love to be proven wrong.) This state of affairs leaves me to conclude that many people don't get any smarter with time: we've had enough scams and schemes to hit the front-page, so no one can seriously claim ignorance. On the flip-side, it also means that, simply by being here and reading this, you've shown to be smarter than the masses of investors.
But back to our subject: expanding our product portfolio, to cover all (or most) areas and investing styles, is what we call Phase 1. We have a veritable laundry list of tools which we want to introduce in Phase 1. You will have to take my word for it, but there will be something for everyone! Those who will benefit the most from our engineering, are those who are unafraid to think, learn and act independently: those who know, by heart and from experience, that the next crisis - and consequent correction - will come as inevitably as the bull market that will follow. As many successful traders have stated, no single thing is more important than having a strategy (and a set of rules) which you follow no matter what, and which is congruent with your personality and economic situation. This strategy needs to grow organically with you, which is why something that works great for one person is disastrous to another. With our software, you can keep whatever methodology you have developed. Ideally, our applications will help you to get more out of your trading strategy by saving you precious time. We aim to give you the means to turn data into knowledge. No more overlooking things, no more missing out on a trade because you couldn't do due diligence in time,... I've already said too much. I guess you could sum it up by saying: no magic but plenty of value.
Phase 2 of our project, will be mostly about consolidation of features into more powerful, complete and complex, products. Needless to say that - unless this proves impossible (for whatever reason) we'll continue to offer, support, and develop our 'legacy' products as long as there's demand for them (we don't leave our custoners in the cold, at least not if we can help it). In principle, we want you to be able to pick and choose the tools that you want and need, instead of packaging everything into one, big - and expensive - piece of software. That being said, we also understand that some of you want just that, and - with your help - we'll make that an option available to you in due time.
Last but not least, we've also outlined a phase 3 for elfetica finance & engineering. If we get there, and what the next step will be, remains to be seen. For the time being, all details remain a closely guarded secret, but it goes without saying that it will be the culmination of our efforts. Unlike the others, a lot about phase 3 is yet to be defined - we just know the essential - where we are going and how we'll get there. We also know that nothing ever goes according to plan, so everything might very well turn out differently. Having a roadmap is important for a number of reasons, but sometimes you have to abandon the beaten track.
The one thing we cannot control, is the demand for our products, which are obviously the key to making this endeavor financially stable and sustainable. Needless to say that without demand, we'll have to take our lessons, cut our losses and move on to another project. Needless to say that I strongly believe in this project, so please don't prove me wrong in this regard. Jokes apart, we are happy to receive your input on anything and everything (and will even reply to it). If you need something specific - one of those things you always wished you had but don't - let us know, that's what we're here for! Obviously, I can't make any promises, but listening to you is another core value of this venture. The features and applications that matter to us are those which matter to you.
Without giving away anything: albeit quite simple, in the right hands, even our first tool can give you an edge when it comes to the eternal question: 'to buy, or not to buy'. That's as specific as I'll get for the time being, hopefully the cat will start coming out of the bag soon. When it does, we'll show you how powerful this little tool can be in the right hands. Considerable amounts of code have been written, and we have a detailed roadmap with specific features, from the first public release, to a much more capable version 2.0. At first, our tools will be relatively simple, but they are based on what we need as individuals to become better traders. Compartmentalizing their functionality, while leaving consolidation for Phase 2, was a fundamental decision. It breaks down complexity into manageable chunks, and makes it possible to experiment with new things that simply wouldn't 'fit' into a large (and expensive) application. While code-reuse has been a goal in every project I've tackled in the past 30 years, it rarely worked out due to a number of factors. What ultimately made it possible - without having to invest large amounts of time - was, unsurprisingly, embracing object oriented programming to its full extent. Compartmentalization, experience, planning, good practices, and the fact that we want and need them ourselves, makes it possible to offer these applications at a fair and affordable price. The latter was important to us from the very first moment, considering that the whole point is to level the playing field for everyone, including people (like us) who can't afford a Bloomberg terminal.
As you know, reality has a way of crushing dreams and bold aspirations. But, whether it does or not, depends as much on you - our readers and, hopefully, future customers - as it depends on us. A lot of work - mostly invisible to you - has already gone into this project (including strategizing, research, website building, article writing, and - most importantly - writing code). We strongly believe that now we've got all the pieces in place to make things happen. All we need, is to survive until our products will make the project self-sustaining. We really gave this project a lot of thought, and we wouldn't be spending time on it unless we were fairly certain that our goals are achievable. (I've mentioned before how important Python is in this endeavor.) As you all know, something has to pay the bills, and right now, that is a problem for me - the only one currently working full-time on this project. To make this happen we need your support and, as I've said before, anyone supporting us at this early stage won't be forgotten (trust me!) If you think our vision is worthwile, please consider making a donation (even small amounts help)!
In a future article, I will give you more color about our goals, vision, current developments and milestones. I hope that I was able to give you an idea of what we stand for and aim to achieve. This vision guides us in everything we do! I'll be more than happy to answer any questions you might still have (with the only exception being information about unannounced projects). Just drop me an email.
I'm excited, and you should be too. All that remains to be done is a 'little' more coding. I guess, I should go back to doing that...
Updates on Sunday, February 23rd, 2020 - Realized that the text was overly dense for comfortable reading, hence the new formatting, which I intend to keep in the future and, slowly, bring to every piece. This site is - and probably always will be - a work in progress, which gets better with time. In the process of re-formatting, I stumbled on a staggering and embarassing number of errors. I apologize for both inconveniences! While I can't avoid typos completely (it's the superpower I'd like to have!) this was particularly bad and I hope (and will check at the earliest opportunity) that no other article is as bad (yes I do proofread, but I also make changes in the process... which, I guess, defies the point). Lesson learned... Hopefully everything's fixed, but I'm sure I'll make a mess with the next one!