Epimenides Research: A Solution for Financial Managers

The world presents the financial manager with a limitless stream of information. Some of it is useful, some of it is not. And there seems to be little help but our intuition and ad hoc numerical analysis by which to discriminate among factors.

A good example of the problem can be taken from the July 1,Wall Street Journal, which portrays in miniature the problem facing most economists, analysts, forecasters and investment managers: Is the day's news good, or bad? Put another way, how does one make sense of it all? As an exercise, read the headlines below:

WSJ headlines, July 1, 2002

- INVESTIGATORS ARE TURNING to Bernard J. Ebbers to determine what role the ousted CEO may have played in the scandal that brought down WorldCom. They expect to find further evidence of improper accounting.

- WorldCom told the SEC it is reviewing financial records for 1999-2001 for possible accounting problems in addition to the $3.8 billion in disguised expenses it disclosed last week. WorldCom shares plunged as they reopened for trading. Nasdaq plans to delist the stock on Friday.

- Vivendi's Messier plans to submit his resignation to the media company's board Monday, according to a person familiar with the matter.

- Manufacturing activity increased in June for the fifth straight month. But construction spending unexpectedly pulled back in May, declining 0.7% to an annual rate of $852 billion.

- U.S. stocks started the quarter off mixed on Monday, with an improved outlook for 3M helping to offset disappointing news about construction spending.

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Well. Was that day's news good or bad? How could one tell? Everybody has their pet anecdotally-based theories, or strategies that may have worked well in some contexts but have failed in others. Few have systematic approaches for anaylizing the kind of news that makes up the bulk of financial market information.

Enter Epimenides. Call us and make an appointment for a demonstration today.