Starter kit

The modern portfolio manager is inundated with content.
Watson provides the insights needed to reach a decision.

Understand the impact of news on your investment portfolio.

It all began with a question from one of our sovereign wealth clients: “We were caught completely off guard; how could we have seen this coming?” A few years back they had made a routine investment in the second lien debt of a company in an emerging market. Two years later, a politician was indicted on corruption charges and within a few days it came to light that this particular politician had a large insider stake in the same company. The resulting liquidity crisis chewed right through the subordinated debt, resulting in catastrophic losses for the client’s fixed income investment.

The client wore his consternation on his sleeve, as his firm had access to some of the most robust, sophisticated risk management tools on the market. Those tools systematically capture only a subset of the risks investors face and require a myriad of expertly defined stress tests to fill the gaps. The client’s frustration was exacerbated by the non-negligible time that had elapsed between which the news was released and the security value plummeted during which an action might have be taken, if and only if the individual managing the portfolio knew what they were looking for. The position could have been liquidated or a derivative contract could have been struck to nullify that idiosyncratic risk. This begged the question, how exactly does one perform a financial stress test which has been conditioned on an individual?

What really excites us is that our answer to this question has much deeper implications for the financial services industry at large. The Watson Platform leverages the power of cognitive computing and big data, and can be accessed as an “insight as a service”. We’ve abstracted away the complexity and reduced the cost of the process such that any financial advisor now has the ability to address client concerns like, “what does this news article mean for my investment portfolio?” or “what exactly am I invested in?” with a single mouse click. Investment Advisors no longer have an excuse to neglect one’s fiduciary duty to one’s clients. Individual retail investors can now leverage the same level of sophistication in their analysis of their 401ks as the tools used by the world’s largest hedge funds. Democratizing access to this functionality is set to change the game in a big way.

The Investment Insights demo showcases an investor querying how recent healthcare news might affect their portfolio. Watch the video to see the starter kit in action.