OPTEMPO and investment decision-making - Process has to match market tempo

OPTEMPO is the US Army military acronym for Operation Tempo. Without going into all the details involved with this army term, for the case of investing, we define OPTEMPO as the gathering and integrating of information to anticipate market actions faster than the market's behavior. Investment research is an operation that must be completed to reach a course of action (COA) consistent with the speed of market behavior. A slow research, decision, and execution process cannot effectively manage short-term risks and opportunities. 

The question for any research group is whether they have the tools, resources, and infrastructure make effective decisions for different market speeds. Short-term decisions need more data for assessment and computing power to filter and manage that data. Global macro may need more variety of data. A quick decision in response to an unanticipated market announcement needs an infrastructure that allows for quick responses. 

Part of a good research and investment process is to develop a decision framework that is consistent with the time available. Different decisions have different timeframes for analysis. An asset allocation decision has an operation tempo that is different than an intraday or high frequency trading operation. If you don't have an OPTEMPO that matches your market adversary, then you will fail and lose money. At the extremes, this seems obvious, but for decisions that must be flexible there needs a dynamic OPTEMPO that can handle different speeds of adjustment. Similarly, if your research decision process cannot match the market tempo, then the trader must walk away from the game.   

I once asked an analyst to provide some work for a surprise auction in two hours for a block of CMBS. I needed his best estimate of value before the auction. He responded that he could not provide any judgment in two hours. I stated that part of the problem was to provide his best guess in the time allotted. We did not control the environment. We passed on the auction, but learned that we needed to improve our ability to respond to more immediate decisions, or we would miss opportunities by passing. Without the right operations tempo, you either must pass on action, or be forced to make bad decisions.