Why Data Is Key to Your Investing Decisions

Sarah Ryerson knows a thing or two about the importance of data – both inside and outside the investing world.

Before becoming president of TMX Datalinx, which provides investors with a wealth of real-time and historical data solutions, Ryerson spent five years at Google, where she led a team that partnered with Canadian banks, insurers and fintechs on how to best use Google's platforms.

Ryerson's experience at the tech giant helped fuel her inquisitive side, something she's brought to her current role. “I was given the opportunity to question everything. I will always ask the 'big' questions," Ryerson says. She's also quick to admit it's just her nature to make decisions based on data, rarely missing an opportunity to put a good spreadsheet to use.

We caught up with Ryerson recently to shed some light on the importance of data to investors, how it's used, how it's changed and what lies ahead.

What's the value of real-time data for investors?

"All investors should have the most accurate and up-to-date views of the market when buying or selling their securities to help them make better trading and investing decisions," Ryerson says.

With retail investors trading in the same markets as professionals, Ryerson says it's critical that they have access to the same accurate and efficient data as professionals in order to ensure an even playing field. She adds that all investors should be looking at the most accurate views of the market when buying or selling their stocks, and that shouldn't be limited to just the big institutional firms and brokerages.

"Delayed data can be used as an indicator, but is not the best option when someone wants to trade in the fast-moving markets we have today – especially where there is a lot of volatility and prices are moving quickly. Real-time data ensures that investors know exact price points when buying or selling," Ryerson says.

What's the value in historical data?

"Historical data is not only important for understanding a portfolio or stock's performance and value, but it's also crucial for analysis," Ryerson says.

For more advanced investors, she says, accurate historical data is critical for trend analysis and other types of evaluation that can inform buying and selling decisions, and to provide an understanding of how and where their orders are executed.

How has data changed the investing world?

"Data has always been key to investing, and as markets and technology evolve, we've been able to provide deeper levels of data at a much faster pace," says Ryerson. She adds that technologies such as faster internet, fibre networks and modern programming language have allowed for very efficient delivery of data, which in turn provides all investors with the ability to view real-time pricing data to support their trading decisions. "We are seeing a shift from Wall Street to Main Street as more retail investors choose to direct their own investments," she adds.

What data trends are you seeing?

"Investors have become more sophisticated with their strategies and require more information, such as level 2 quotes and real-time data to execute on their strategies," Ryerson says. These have become particularly relevant with the pandemic-related influx of new retail investors who are making their own investing decisions and watching markets closely for opportunities.

ESG (environmental, social and governance) factors have also become a growing trend for many investors, Ryerson says, adding that the TSX recently launched six new ESG Indices to help investors identify which listed companies adhere to ESG standards and practices.

What is alternative data and how might it benefit investors?

"Alternative data is generally data that is not pricing related and not collected from the exchange or company fundamentals. It typically includes information sourced from outside the exchange or the company itself," Ryerson says. She offers examples such as data that relates to satellite imagery, geo locations, sentiment, credit card transactions, jobs and hiring, weather, sales and cargo. "Today, the main users are quant-heavy asset managers, but we expect that some alternative data could eventually become part of core fundamental data," Ryerson notes.

What excites you most about data and the future of data?

"The global capital markets industry is in the midst of a fascinating evolutionary phase – the pace of change is accelerating and has reshaped the landscape, impacting how markets are run, redefining client needs and obliterating the boundaries of possibility. This is super exciting to me," Ryerson says. She adds that, by 2025, it's estimated that more than 460 exabytes of data will be created each day around the world, noting that's the equivalent of more than 200 million DVDs worth of data – per day!

As for the next frontier, Ryerson believes it's already underway. "It's taking data and turning it into actionable insights," she says. "You combine the advent of data with machine learning and it really opens up new opportunities to uncover hidden insights that humans didn't have the capability to see. As TMX continues to invest in its data and analytics platforms, the market as a whole will benefit from greater insights into the companies they are investing in."