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Robo-Analysts Beat ‘The Street’

Dec. 17, 2021 9:43 AM ET
David Trainer profile picture
David Trainer's Blog
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Our Robo-Analyst’s stock ratings outperform those from human analysts because they are driven by proven-superior fundamental research and unbiased decision-making.

You don’t have to take our word for it. Professors at Indiana’s Kelley School of Business and Harvard Business School prove the superiority of Robo-Analyst’s stock ratings in Human versus Machine: A Comparison of Robo-Analyst and Traditional Research Analyst Investment Recommendations. Bloomberg features the paper here.

Read the paper

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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