Investor information & the shrinking sell side

One of the past year’s flurry of books on financial crises offers an interesting side comment on the connection between consolidation among investment banks and the “commoditization” of financial information:

“The informational ether – with access to real-time prices; market commentary flowing as a continuum from screens at home and office, airport terminals, and teller lines; stock recommendations spilling out of countless Web sites – reduces the market advantage of investment firms. With little left to differentiate themselves, their best offense comes from economies of scale and cross marketing.”

– Richard Bookstaber, hedge fund manager
& Wall Street risk management expert
A Demon of Our Own Design
(Hoboken: John Wiley & Sons, 2007)

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