#359
Glory Days
Published:
Oct 24, 2020
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It is no secret that automation is affecting the service economy. This is accelerated during economic downturns, presenting an existential threat to many jobs. In finance, for example, machines have become increasingly competent at analyzing financial statements and monitoring earnings calls, making the role of analysts look easier (and perhaps more dispensable).
Researchers at Georgia State and Columbia University, however, reminded us this week of the power of human ingenuity. Corporate leaders have become increasingly crafty - adapting the wording of their statements in anticipation of what algorithms interpret as trading signals. Overall, evidence suggests that positive messaging yields better machine-produced analyst reports.
In the past century, tailoring communication for human audiences was a vital Wall Street skill. It's thus hardly surprising that - as the prevalence of AI and ML surges - alternative data providers arose, allegedly capable of dissecting florid language to provide an investing edge.
It is ultimately ironic that, in a world heading in an increasingly data-driven direction, eloquence appears to be rewarded. But, as the legendary and prolific rocker Bruce Springsteen reminded us this week while dropping his 20th album, old tricks still work.
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Sweet-talking CEOs are starting to outsmart the robot analysts - Company executives have started to adapt their statements and even their delivery to cater to the algorithms parsing text and speech for trading signals, researchers at Georgia State University and Columbia University have found. Managers are emphasizing positivity and avoiding words or phrases known to be perceived by machines as negative. Read more
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