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Forward Looking Statement Count

Updated annualData needs: mediumlong onlyshort onlylong short

2010

Li, F. (2010). "The Information Content of Forward-Looking Statements in Corporate Filings—A Naïve Bayesian Machine Learning Approach." Journal of Accounting Research, 48(5), 1049-1102.

Read the paper →

In plain terms

Companies that ramp up forward-looking language in their annual filing tend to outperform; those that pull back tend to underperform.

How it works

Forward-looking statement (FLS) lexicon density on 10-K MD&A (Item 7) is a predictor of forward-realized volatility and information environment quality. Falling FLS density -> guidance withdrawn -> SHORT; rising -> confident communication -> LONG.

Live results

0 times picked on its own · 1 times inside a blend (1 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 1 such blended picks (1 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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Data dependencies

Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
SEC 10k sections
A data feed this strategy reads, refreshed on its normal schedule.

Expected edge

Reported return: ~2-4% over 6mo on top-decile
Tested over: T+1 to T+180d

Li 2010 JAR: FLS-count z >= 1 predicts ~2-4% over 6mo; conditional on guidance-direction sign.

Related families

Transcript Guidance ShiftFilings, Insiders & Ownership

Counts direction-specific words ('expect', 'headwind', etc.) on the call and z-scores them — guidance shifts predict price drift.

Mdna Tone DeltaFilings, Insiders & Ownership

Read each year's 10-K through a finance-specific positive/negative word filter. Companies whose tone got more positive year-over-year tend to outperform after the filing date; those whose tone got more negative tend to lag.

Filing Text DeltaFilings, Insiders & Ownership

Counts uncertainty/risk words ('may', 'could', 'challenging') in 10-K Item 1 (Business) YoY. A spike means management is privately more worried — bearish.

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