Earnings call analysis 2.0 goes beyond good and bad words
Quants develop new ways to extract signals from media-savvy chief executives and their financial statements
Reading between the lines is a skill that students of literature learn. It’s also becoming a vital technique for investors who analyse earnings calls in search of signals.
The old way that investors used to comb transcripts for sentiment is less effective at predicting returns now that company senior executives have begun to pepper their financial statements with optimistic corporate-speak. So, quants are having to find new ways of extracting cues from the words.
Earnings call investing
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