WebWord has a good write up about Professor Feng Li who data mined the annual reports of 34,180 companies with some interesting results. Li counted the number of times words like “risk” and “uncertain” showed up in the reports and compared the data to previous years.
Professor Li discovered that a “big jump in words related to risk is usually followed by poor share performance” which makes a ton of sense. He built a model portfolio based on this data. The punch line is that he would have outperformed the S&P 500 index by 6% per year since 1995. Smashing!
Has anyone seen other analysies like this one? What else can we “data mine” to read the market?
We linked to WebWord before, for John Rhodes’ opinions on Microsoft and Web 2.0. (our article)
5 comments Monday, Jul. 10, 2006
by Jason
