Stories of the Institutional Past #9
Bloomberg
I used to have a Bloomberg for all my professional life. I started using it in the late 90s for data purposes at my university. At first, those two split screens and the dark colour scheme felt cumbersome and somewhat alien. Once I started investing and researching, it became an invaluable tool. Quickly, it transformed not only into a research hub but also into a very efficient communication tool with tons of chats opening up to reach out to brokers and colleagues around the globe. Heck, I remember the time before the fancy windows allowed for all sorts of customisation of your screen's appearance. This quickly formed a very individual set-up for every investor and trader. One of the best traders I knew had only one window open. It had US, European, and UK bond futures and STIR (money market) contracts on it, live data, and volume, that was it. He hardly lost money. Less is more.
My screen looked like this for most of my time (see picture below). I never liked the launchpads to spread across two screens as I had other tools and emails open on my other screen. This changed when I had 4 screens, the maximum I can really focus on. There, I would have Bloomberg spanning across two screens, leaving one for emails and one for the in-house portfolio management & trading tool.
I will be the first one to admit that, at times, I would just stare at the screen without giving it much thought. The colours and constant messages are just brain sugars trying actively for you not to think. I remember when the daughter of a senior C-suite person came to our floor for some “work experience”. She asked me a few questions about markets and then wanted to know what I do all day. “Watch this”, I told her and sat back in my chair and just stared at screens for about 20 minutes without saying or doing anything. The young girl patiently looked at me and waited for a reaction. I suddenly jumped up, slightly scaring her in the process. I then settled back into my chair. “That’s what I do pretty much all day”, I said. She left her work experience day possibly never to return as an investor or trader.
The problem with Bloomberg, at least for me, was that it didn’t really gel with my thinking processes. I needed to be away from screens to think and develop ideas. I had better trading ideas from sitting on the toilet rather than in front of a Bloomberg. The constant alertness to news flashing or market changes disrupted my ability to see a clearer picture. This led me to turn off the screens for a few hours a day. In the beginning, this was extremely hard, but it benefitted me immensely. Things have gotten worse with Bloomberg’s integration of its own portfolio management system and execution capabilities. You don’t really need anything else, and that’s a great masterstroke by the organisation. It has morphed from a news & data service provider to something bigger, a one-stop shop for every investor. In macro and fixed income, there is no better alternative. The real power tools are the various pricing (options), scenario builders and their risk systems if used appropriately. News & articles are mediocre these days.
You have to wonder, with the speed of disruption occurring, how long can Bloomberg really hold onto this monopoly? A few banks have tried to break the system with alternatives but ultimately failed. A few disgruntled asset management companies have cut the amount of licences to only portfolio managers, but Bloomberg is still the most dominant force out there.
The privilege of owning a Bloomberg license isn’t cheap. Roughly 24k USD a year, and that does not include real-time data access, which will cost you another few k on top. When I ran my own firm, we had a few licenses. What I didn’t realise at the time was the very stringent clauses on termination. As I wanted to shut down one licence, it transpired that the cancellation period would entail still more than a year. Read the small print. It’s ridiculous.
I haven’t used Bloomberg for a few years now, but I do miss it at times, and I am contemplating getting one again in the near future. It is way easier to reach out to brokers and people via chats, and as far as data is concerned, you can get way more granularity in various markets. A proper futures curve with automatic roll capabilities and serial contracts and a ton of option data across different asset classes are just some of the few highlights to mention.
TradingView is a tool I use now, and it’s excellent for my work, but it also has its limitations. Sure, I am also running a few old-school spreadsheets that do some of the work for me and have access to some broker tools that can be handy for charting and analysis purposes.
My skills or ability to come up with good investment ideas has not deteriorated at all; I’d even say it has improved as less data and disturbance in my thinking have helped me keep a clearer mind. That, of course, doesn’t mean it should work like that for everyone. Bloomberg is a great tool, and if you are using it frequently, I would suggest feeling the full force of its analysis toolkit, including all the charting capabilities. That’s the power it has. It’s there to work for you and not the other way around. Avoid the trap of too much noise and news flashes spanning your screen or screens. Remember to adapt it to make you money, not them, and no, nobody cares how flashy your screen looks; it just doesn’t matter.
Best of Luck!