Fewer Verbs and Nouns in Financial Reporting Could Predict Stock Market Bubble, Study Shows

[Elmore Furth]

It appears that over optimistic language is apparent in inventment descriptions.

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.

"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."



Fewer Verbs and Nouns in Financial Reporting Could Predict Stock Market Bubble, Study Shows

[GillesDeleuze]

1. standard practice. nothing really new here.

ceo's clam up a bit when they are uncertain about future earnings.

[Jim__]

2. Sounds similar to group think.

Everybody is just repeating what they heard. Nobody is actually thinking about what's happening.