51–60 of 66 posts
Create a hedge fund and run your proprietary algorithm. If you succeed over the long term and generate a consistent market premium for a given risk exposure, you've got a story. If you don't do this, you've got an unproven claim like many others in history, the vast majority of which were proven false when put into practice.
Create a hedge fund and run your proprietary algorithm. If you succeed over the long term and generate a consistent market premium for a given risk exposure, you've got a story. If you don't do this, you've got an unproven claim like many others in history, the vast majority of which were proven false when put into practice.
This will get gamed and the "profits" will dwindle very quickly.
If this was feasible it wouldn't have been published.
With all due respect, this sounds like data dredging mixed with a bit of astrology, filled out on in a PR release sent in by the authors and reprinted by the wsj.
> CEOs whose faces during a media interview showed disgust [...] were associated with a 9.3% boost in overall profits in the following quarter. I'm surprised I haven't seen anyone say "Regression to the mean" yet. Suppose the CEO gets obviously-scowly whenever their last quarter was abnormally bad... Well, the next quarter will naturally tend to be better, purely because it's a return to a "normal" state of affairs.…
I have never heard of regression towards the mean in profits. It certainly doesn't exist for stock prices. You would actually tend to observe trends - the opposite phenomenon. For example, Google would have a 20% increase in profits on one quarter and another similar increase the following quarter but not a sudden loss caused by a regression to the mean.
Generally, though, when a CEO is looking stern and fearful and declaring writedowns and layoffs and erasing the 'goodwill' off of their books one quarter along with huge losses and financial penalties, etc then the next quarter usually isn't quite as big of a shitshow...
So the point here would be to buy a stock that has been overly punished and become unfashionable, while the overall business is still sound and will eventually rebound and the stock price should perk up.
If true, though, reading the negative emotions of the CEO would be correlated with past performance and it wouldn't be useful to determine if the company really was sound or if the company was actually heading to zero.
I think picking up a micro-facial movements and body posture is where this software analysis can shine, the minute details that can indicate emotions. Adding sentiment analysis, not just CEO facial analysis, is an interesting tool that can be used by traders / investors. This is a short paper, may be interesting: Trading Strategies to Exploit Blog and News Sentiment - http://www3.cs.stonybrook.edu/~skiena/lydia/blogt…
http://www.extremetech.com/extreme/149623-mit-releases-open-...
Nate Silvers wrote an entire book on this subject called "The Signal and the Noise" [1]. Humans are so often taken in by people claiming to be able to make predictions by combining new data points. The more unusual, or unrelated to the subject matter, the better. They make good headlines but (not surpsingly) almost always turn out to be heavily flawed in practice. You can basically measure how much a pundit/expert is…