Can You Live Without Your Bloomberg?

On our journey to democratize equity research, we occasionally come across skeptics. One common pushback centers around “access to financial data”. How, these skeptics ask, can an independent analyst ever compete with a Wall Street analyst armed with a Bloomberg terminal? Surely they must be at a competitive disadvantage? As many of our analysts can attest to, this argument overestimates the value of pure data and underestimates the abundance of cheaper alternatives.

Democratization of Data

Bloomberg is designed for a wide range of users, including bond and fx traders who use the terminal in a very different way. We limit ourselves here to the case for equity analysts and investors who make decisions on the basis of fundamentals.  Fundamental analysts use Bloomberg primarily to get prices and news, screen for new opportunities, get historical data, and conduct comparative analysis. Bloomberg is indeed a powerful machine, but in practice most analysts only need to use a small fraction of its capability.

This capability can increasingly be replicated with a range of much cheaper tools that are available online. The fact is that data is a commodity, and the only challenge lies in aggregating that data in a valuable way. At the very basic end of the scale, Yahoo Finance provides prices, news and some calculated ratios. However it lacks the kind of functionality that analysts find useful. Ycharts finds a middle ground between Yahoo Finance and Bloomberg. The product is a good fit for independent analysts – a wealth of historical data and calculated ratios, as well as the ability to chart this data over time. It isn’t free, but it is a fraction of the cost of Bloomberg. One of the most valuable features is being able to plot revenues, margins and ROIC over the last 10 years. It’s also possible to screen for new opportunities using a range of inputs (see this previous post for more on screening tools)