As an investor, I'm interested in original thinking in combination with a good track record, so a) I don't seek much insight from analysts, and b) this at the current time does not seem to be in danger of being replaced by AI. So, Uncle Bob.
That pp.10-13 framework you highlight in the Australian paper is indeed excellent.
However, attempts to fully-automate the listen => intrepret => react process may not be effective once everyone's doing it, and not just because any inefficiencies are arbitraged out.
Firstly, do "earnings estimate momentum" strategies even work anymore (it feels really 1980s), especially considering how many megacap stocks leading the market these days don't yet have any earnings, much less momentum to track.
Secondly, I've always told my research department members that "earnings season" should actually be the *easiest* time of the quarter because all your conclusions should've been made well before the results come out and prove you right ;-)
Thirdly, it reminds me a bit about when program traders and even some financial news outlets put in place rules-based systems to trade or write articles depending upon how results matched street estimates; however, these often failed to track "the whisper numbers" which hadn't yet shown up in the consensus, so there were lots of counterintuitive instances of "I don't understand why the management beat the numbers and guided up, but the stock is down?!?"
all good points, but the whisper numbers should wash out in the long run and over many stocks, so as long as earnings revisions momentum works, the methodology should work. I don't know about the US, but at work we have checked earnings revisions momentum in the UK and europe and it still works.
Don't worry! AI can only do what can be scripted; it's not intelligence, just advanced programming. It will leave you with more time for imaginative and inventive thinking. Isn't that wonderful?
The question is no longer if- but when.
Unfortunately, yes.
The content of AI is automation - paraphrasing Marshall McLuhan
As an investor, I'm interested in original thinking in combination with a good track record, so a) I don't seek much insight from analysts, and b) this at the current time does not seem to be in danger of being replaced by AI. So, Uncle Bob.
https://pracap.com/whats-driving-stocks/
I think this article frames well the background against which this trend is developing.
That pp.10-13 framework you highlight in the Australian paper is indeed excellent.
However, attempts to fully-automate the listen => intrepret => react process may not be effective once everyone's doing it, and not just because any inefficiencies are arbitraged out.
Firstly, do "earnings estimate momentum" strategies even work anymore (it feels really 1980s), especially considering how many megacap stocks leading the market these days don't yet have any earnings, much less momentum to track.
Secondly, I've always told my research department members that "earnings season" should actually be the *easiest* time of the quarter because all your conclusions should've been made well before the results come out and prove you right ;-)
Thirdly, it reminds me a bit about when program traders and even some financial news outlets put in place rules-based systems to trade or write articles depending upon how results matched street estimates; however, these often failed to track "the whisper numbers" which hadn't yet shown up in the consensus, so there were lots of counterintuitive instances of "I don't understand why the management beat the numbers and guided up, but the stock is down?!?"
Finally, I wonder if they'll ever be able to contemplate and replicate the role of good old-fashioned human prejudice and gut feel one learns about managements over a multi-decade career https://drive.google.com/file/d/1cxOd0Qo1AzdVdwzYKUYENtsto1RGKrfR .
all good points, but the whisper numbers should wash out in the long run and over many stocks, so as long as earnings revisions momentum works, the methodology should work. I don't know about the US, but at work we have checked earnings revisions momentum in the UK and europe and it still works.
Don't worry! AI can only do what can be scripted; it's not intelligence, just advanced programming. It will leave you with more time for imaginative and inventive thinking. Isn't that wonderful?
I agree with you, but have you ever met stock analysts? To assume they are imaginative and inventive is quite optimistic...
PS: Please don't tell my colleagues at work I said that 😂