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Transcript Uncertainty Score

Updated quarterlyData needs: mediumshort only

2014

Loughran, T., McDonald, B. (2014). "Measuring Readability in Financial Disclosures." Journal of Finance, 69(4), 1643-1671.

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In plain terms

When management uses lots of hedging words ('may', 'could', 'approximately') on the earnings call, the stock tends to underperform over the next 1-3 months.

How it works

LM uncertainty-lexicon firing rate (modal verbs, approximations, hedges) on the full transcript predicts forward volatility + negative-tail returns. Bochkay-Brown-Leone-Tucker 2024 update reports a 30-90d negative drift on uncertainty-z high tail.

Live results

1 times picked on its own · 2 times inside a blend (2 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 2 such blended picks (2 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.
Earnings call transcripts
Full earnings-call transcripts (prepared + Q&A), tokenised.

Expected edge

Reported return: ~2-4% over 60-90d on top-decile uncertainty
Tested over: T+1 to T+90d

Loughran-McDonald 2014 + Bochkay et al 2024: uncertainty z >= +1 -> ~2-4% drift over 60-90d.

Related families

Transcript Exec UncertaintyFilings, Insiders & Ownership

Filters out analyst speech and just measures how often the CEO/CFO use uncertainty words ('may', 'could'). High uncertainty = bearish.

Transcript Obfuscation BloomfieldFilings, Insiders & Ownership

When managers' call language gets harder to read (rising Fog index) Q/Q, they're hiding bad news. Predicts 12-month underperformance.

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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