Our Robo-Analyst’s stock ratings outperform those from Wall Street analysts because our research is unconflicted and based on proven-superior financial data.
Proof: Human versus Machine: A Comparison of Robo-Analyst and Traditional Research Analyst Investment Recommendations, a paper from Indiana’s Kelley School of Business and Harvard Business School. Bloomberg features the paper here. More on the superiority of our data, models and ratings is here.
Here are key quotes from the paper explaining why our ratings are superior:
Unbiased Process
- “Robo-Analysts generally follow set rules with more limited human review, allowing their recommendations to be more consistent, less susceptible to behavioral biases, and less conflicted by investment banking, trading commissions, and the need to curry favor with company management” – pp. 2, 1st para.
More Rigorous Research
- Robo-Analysts employ a different research process that results in recommendations … more likely to incorporate information from complex disclosures.” – pp. 6, 2nd para.
Material Outperformance
- "Portfolios formed from Robo-Analyst buy recommendations earn abnormal returns that are statistically and economically significant and are between 4 to 5 percentage points higher than human analysts when annualized.” – pp. 7, 2nd para.
- "Our results ultimately suggest that Robo-Analysts are a valuable, alternative information intermediary to traditional sell-side analysts.” – pp 29, 2nd para.
This article originally published on December 16, 2021.
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme.
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