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“The most crucial information is often hidden in rarely-read text, rather than in the heavily-scrutinized financial statements numbers: for example, it was a footnote that revealed the complex fraud hidden behind Enron’s record-beating numbers,” he said.

Deluard’s initial experiments with such sentiment analysis suggested that the count of words used in quarterly filings could help predict events like a recession or changes in the value of currencies.

For example, he studied instances of the words “slowdown” and “recession,” to see if there was a correlation between the use of those words and an economic downturn, and found that the use of such terms started to increase two years before the 2001 and 2008 recessions. “The low occurrence of these terms in recent filings is a good omen,” for the U.S. economy in the near term, he concluded.