Data rules everything in financial markets.
While this view predominates in 2018, it isn’t long since many in the financial industry would have sneered at the idea that computer models and data might be more efficient ways of making money than good old fashioned intuition.
Winton Group, the hedge fund founded in 1997 by David Harding, a British physicist turned investor, was one of the pioneers of data driven investing, basing its philosophy – in the company’s words – on the belief that “the scientific method can be profitably applied to the field of investing.”
Harding pioneered a system of investing known as trend following, whereby trends and patterns in markets are identified and used to inform a long term investing strategy.
Winton had assets of around $US27 billion (£20.6 billion) at the end of 2017, putting it among the 10 largest hedge funds on the planet.
Business Insider was invited by Winton in September to get a glimpse of the fund’s offices, as well as its recently completed chart room.
The chart room is a painstakingly curated tribute to financial history which also serves as a reference point for the fund’s staff when looking at market trends. Charts are crucial to Winton’s philosophy, with Harding calling graphical representations “the only sensible way to engage with economic history.”
Take a look inside the room, which is like a statistical Garden of Eden, below:
Winton’s idiosyncratic approach to the world extends to the choice of location for its London headquarters. While most investment firms choose either the bustling City of London, or the swanky district of Mayfair for their offices, Winton is based out of the West London district of Hammersmith, 40 minutes from the City.
Before we get to the chart room, let’s take a look at the rest of Winton’s office. Like many hedge funds, Winton tends to steer clear of the limelight. Its media presence is minimal, and it is by no means a household name. The office itself is also somewhat inauspicious from the outside. Located just off a main road, it is easy to miss.
The inside, however, is just what you’d expect from a firm operating at the intersection of tech and finance, and wants to attract talent from both sectors. Its sleek and minimalist design is coupled with the sort of features you’d expect from a trendy modern office. There’s an in-house barista …
Plenty of breakout areas for staffers to have informal meetings, or just a quick chat …
And of course, there’s the pre-requisite ping pong table.
The office is also home to an auditorium, where Winton hosts events for both staff and clients on a frequent basis.
Possibly the coolest feature of Winton’s office, aside from the chart room, is this broken column.
It looks at first like some builders have had an accident, but on closer approach you’ll see that it contains a fossil, discovered during the most recent renovation of the building.
Artworks are dotted around the place, including this pair of statues of iconic British children’s character Paddington Bear — one of which was designed by legendary architect Zaha Hadid.
There’s also this sign, brought from a DIY store which was based near Winton’s first office in the Kensington area of London after the firm moved offices. All of this, however, is merely a warm up for the chart room, the jewel in the crown of Winton’s offices.
Before even getting to the chart room you’re reminded of Winton’s focus on data. In a single corridor there’s this five-metre long chart following the history of UK government bond yields …
And this historical stock ticker. But now, it’s time to enter financial nerd heaven — the Winton Group chart room.
Part museum, part reference library, the chart room is the result of several years of effort by staff at Winton, led by James Holmes, a senior vice president at the firm. The chart room’s current incarnation took eight months’ solid work by Holmes and his colleague, analyst Nick Levine.
The main focus of the chart room is a series of charts tracking the long term price movements of 80 different asset classes throughout history. These range from soy beans to sugar to the British pound.
Holmes co-wrote a book called ‘The Pit & the Pendulum’ which charts major speculative bubbles and panics across history, and several are plain to see in the chart room. The chart below shows the hyperinflation of sugar prices in the 1970s:
There really are charts everywhere. Data on the charts is presented on a logarithmic scale, allowing for easier reference to major price movements over history.
Alongside the charts, the chart room is filled with all sorts of interesting trinkets and historical items from the world of finance. This includes numerous esoteric forms of currency, including plastic coins and 3D metal coins from Somalia (both are pictured below)
Before digitisation, this is how stock prices were recorded — painstakingly by hand in giant ledgers
This is a comptometer, widely regarded as being the first commercially successful mechanical calculator. It was first released in 1887, and marked a major leap forward for markets, allowing traders to make calculations at far greater speeds
As well as being a little slice of paradise for finance nerds, the chart room serves an important practical purpose as a reference library for Winton’s staff. It contains hundreds of books, many of them rare, chronicling hundreds of thousands of data points. Much of this data has been digitalised by Holmes and Levine, allowing analysts and data scientists to access it without spending hours trawling through paper resources.
“The Winton chartroom serves as a resource for our quantitative researchers and other investment professionals,” Holmes told Business Insider.
“With charts of financial securities, commodities and currencies stretching back as far as three centuries, the room provides an intuitive visualisation of how financial markets evolve over the long-term.”
“Its collection of books and artefacts help to place specific price movements in the appropriate historical context, reducing the risk that financial markets are seen simply as an abstract set of numbers,” he added.
The chart room also contains stacks and stacks of finance based boardgames, which Holmes says have all been played by Winton staff at some point.
Business Insider’s favourite item in the collection was this American war bond certificate. Drawn with a motif of all your favourite Disney characters, it was issued during the Second World War as a fun way to give kids a small investment portfolio, while also helping the US war effort in Europe and the Pacific.
Putting current market moves in a historical context is key to Winton’s philosophy, so it’s no surprise that the chart room contains a multitude of books documenting major financial events, particularly the crash of 1929, still seen by many as the most devastating event in market history.
Some have more exciting cover art than others …
There are even old advertisements for a variety of commodities, including this one for gasoline
Sadly, the chart room isn’t open to the public, so anyone wanting to see more of the room will need to start investing in the firm.
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