Software “detects CEO emotions, predicts financial performance”

Software “detects CEO emotions, predicts financial performance”
blogs.wsj.com

Picture Ruby giving AMD's presser.

There are always funds you hear about that are created based on some previously unexplored data signal like this, twitter sentiment is an example that was popular circa 2011.

The problem that most of these signals has is that its really not a predictor on its own and it becomes just one of the 100's of signals that is consumable by financial models.

This means that you need to go through the trouble of collecting, cleaning, calibrating and discretizing this signal only to have it feed into a model where it might get a weighting of 0.5% of the overall signal.

> However, accuracy is an issue. Dr. Ekman claimed 90% accuracy for his emotion-coding system, but software inspired by his work hasn’t been tested independently.

This seems a bit dubious. Is this 90% accuracy for predicting stock movements? Or 90% accuracy for predicting emotions based on facial features? I doubt its the former or someone like two sigma would have just hired the author before he published. If its the later then its really unclear just how accurate their system is.

[1] https://en.wikipedia.org/wiki/Lie_to_Me