Featured Research

from universities, journals, and other organizations

Fewer verbs and nouns in financial reporting could predict stock market bubble, study shows

Date:
July 19, 2011
Source:
University College Dublin
Summary:
After examining 18,000 online articles published by the Financial Times, The New York Times, and the BBC, scientists discovered that verbs and nouns used by financial commentators converge in a 'herd-like' fashion in the lead up to a stock market bubble. The findings show that trends in word use financial journalists correlate closely with changes in leading stock indices.

When the language used by financial analysts and reporters becomes increasingly similar the stock market may be overheated, say scientists.

After examining 18,000 online articles published by the Financial Times, The New York Times, and the BBC, computer scientists have discovered that the verbs and nouns used by financial commentators converge in a 'herd-like' fashion in the lead up to a stock market bubble. Immediately afterwards, the language disperses.

The findings presented at the International Joint Conference on Artificial Intelligence, Barcelona, Spain, on July 19, 2011, show that the trends in the use of words by financial journalists correlate closely with changes in the leading stock indices.

"Our analysis shows that trends in the use of words by financial journalists correlate closely with changes in the leading stock indices -- the DJI, the NIKKEI-225, and FTSE-100," says Professor Mark Keane, Chair of Computer Science in University College Dublin, who was involved in the research.

"By plotting the distributions of words used in financial articles published online between 2006 and 2010 into a computer model, we were able to identify what we call 'verb convergence' and 'noun convergence -- where the language used by financial journalists shows converging agreement."

"Our study shows that reporters converge on the same language -- 'stocks rose again', 'scaled new heights', or 'soared' -- as their commentaries became more uniformly positive in the lead up to the 2007 crash."

"They also appear to refer to a smaller-than-usual set of market events -- presumably because of an increased fixation on a small number of rapidly rising stocks," explains Professor Keane.

"Google predicted car sales from analyses of search queries, and the Amazon book recommender system captures consumer preferences by correlating book titles, so why not listen to the language used by financial commentators to see if it could help predict the stock market," says Aaron Gerow, who completed the research as part of his MSc in Computer Science at University College Dublin.


Story Source:

The above story is based on materials provided by University College Dublin. Note: Materials may be edited for content and length.


Cite This Page:

University College Dublin. "Fewer verbs and nouns in financial reporting could predict stock market bubble, study shows." ScienceDaily. ScienceDaily, 19 July 2011. <www.sciencedaily.com/releases/2011/07/110718101202.htm>.
University College Dublin. (2011, July 19). Fewer verbs and nouns in financial reporting could predict stock market bubble, study shows. ScienceDaily. Retrieved July 24, 2014 from www.sciencedaily.com/releases/2011/07/110718101202.htm
University College Dublin. "Fewer verbs and nouns in financial reporting could predict stock market bubble, study shows." ScienceDaily. www.sciencedaily.com/releases/2011/07/110718101202.htm (accessed July 24, 2014).

Share This




More Computers & Math News

Thursday, July 24, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Robot Parking Valet Creates Stress-Free Travel

Robot Parking Valet Creates Stress-Free Travel

AP (July 23, 2014) — 'Ray' the robotic parking valet at Dusseldorf Airport in Germany lets travelers to avoid the hassle of finding a parking spot before heading to the check-in desk. (July 23) Video provided by AP
Powered by NewsLook.com
Six Indicted in StubHub Hacking Scheme

Six Indicted in StubHub Hacking Scheme

AP (July 23, 2014) — Six people were indicted Wednesday in an international ring that took over more than 1,000 StubHub users' accounts and fraudulently bought tickets that were then resold. (July 23) Video provided by AP
Powered by NewsLook.com
The Reviews Are In For The Amazon Fire Phone

The Reviews Are In For The Amazon Fire Phone

Newsy (July 23, 2014) — Amazon's first smartphone, the Fire Phone, is set to ship this week, and so far the reviews have been pretty mixed. Video provided by Newsy
Powered by NewsLook.com
Bigger Apple Phone, Bigger Orders

Bigger Apple Phone, Bigger Orders

Reuters - Business Video Online (July 22, 2014) — Apple is asking suppliers to make 70 to 80 million units of its new larger screen iPhone, a lot more initially than its current model. Fred Katayama reports. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins