Social Change and Financial Market Awareness

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brian hill, third rail economy

introduce financial markets and how that relates to social change and social justice

attendee topics:

  • scraping corporate financials from regulatory filings; getting

access to high quality financial data is expensive and out of the reach of small orgs

  • better understanding of markets from a fundraising perspective
  • general understanding of markets, divestment, the threats to things

like union pensions

  • understanding markets and social change tactics for the marketplace

grew up east of cleavland, left for SF. 24-36 in investment research. revere data, lead a small investment research team. research every co that trades on a major US stock exchange. evenutually expanded to the 36,000 publicly traded companies around the world. small to massive companies.

a publicly traded company: facebook is not, ibm is. most name brand companies end up as publicly traded companies. means that companies are chopped into pieces, and investors can own small chunks. in theory the value of the shares relates to the value of the company. provides companies with access to capital.

many companies are extremely diversified, lots of smaller companies under one. investors can own shares of specific companies or can own a chunk of a diversified grouping of shares, ie a mutual fund. new thing, ETFs, like mutual funds but they trade on the stock exchange. all economic entities.

at a human level, there are asset managers who buy and sell stocks on behalf of investors. goldman sachs, bank of america. some asset managers control on the level of a trillion dollars.

companies are clustered around population centers.

brian spent his time building classification systems for companies. grouping companies by what they do: what they manufacture, what they trade, or .... then organize by geography, and by who they interact with.

  • how do you classify companies with multiple businesses?

-- classification places them in multiple categories and highlights the main source of income.

  • what part of the economy is grey-market or illicit activities?

-- not sure. within the framework you can look for organizations that operate in one area but make most of their income in another.

  • what type of data is in this model beyond supply chain information?

-- there's information available about publicly traded companies like location, size

particular industries around the world: certain industries are associated with certain geographic areas. ethanol = midwest, fuel cell = northeast, uranium = ... a classification system can help you find regions where particular industries are relevant, and find supporters based on that geography.

there are lots of companies that provide business classification systems. everything from the system used by NASDAQ to the systems on Google Finance, Yahoo Finance, Thompson-Reuters.

last year goldman sachs increased their budget for market data and tools by a billion dollars. subscriptions to market datasets can be around $1000/mo.

how can we free up financial sector data at a fraction of the price? by knowing exactly what you need--a focused dataset on specific sectors or regions.

  • is part of the mission to bring financial data into the mix of

nonprofit advocacy tools? -- ...

show & tell: chart of average stock prices of companies that mine for uranium vs. all mining companies vs. the economy as a whole. shows uranium mining companies going up, and then dropping after fukushima. drop means that it will be more expensive and more difficult to grow companies and expand capacity because they have less access to capital. this might be helpful for advocacy and knowing when to act on nuclear issues. linking issues to markets can give you more ways to analyze the global situation.

useful things to ask for: specific sectors, end of day stock price, size of companies. size of company = market cap

Bank of America (77.5 bn) vs. "Average Bank" (2 bn) vs. New Resources Bank (single outlet, 10.7 ml)

Banks can lend something like 10x deposits

market cap is extremely basic data.

how do we communicate how a social issue relates to market interests? how to connect individuals to the actions of larger economic actors?

most of wall street doesn't directly look at industries. machine trading acts based on price and movement, and acts based on clusters of companies or data. it doesn't act on industry classification or sectors. there's an opportunity for civil society to make use of the industry classification to act on specific issues.

fracking/natural gas exploration, coal, wafer silicon.

appalaichan region oil and gas is more active than other regions in the US.

how do pipleline issues affect the oil and gas market?

say we select 7 distinct sectors that apply to an issue, like exploration, drilling, pipeline, shipping, processing. this cuts down the 36,000 companies, 13,000 sectors, and lets us look at who is involved, who finances the sector

example: greenpeace made an announcement targetting a specific sector, but looking at the market data for that sector showed no response. greenpeace has a lot of experience in their arena, but wasn't able to catch the eye of the companies or the traders. how do you affect the market as a part of your action? one suggestion: include stock ticker symbols in the press release.

if you're looking at real estate, some companies called REITs own huge numbers of buildings in a particular category: apartment buildings, strip malls, prisons.

a step beyond the classifications system is supply chain data: who is dependent on who for sales and revenue? you can follow the network based on these dependencies