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Methodology

Why Disclosure Risk Matters More Than Sentiment

Sentiment tells you how text feels. Disclosure Risk tells you what changed. The difference is everything.

The Problem with Sentiment Analysis

Most text analysis tools measure sentiment — whether language is positive or negative. This works for tweets and reviews. It fails for SEC filings.

Why? Because SEC filings are written by lawyers. They're always cautious. They're always full of risk factors. Every 10-K sounds negative if you just count warning words.

Sentiment Analysis

"This filing contains 847 negative words. Sentiment score: -0.32 (Bearish)"