Linguistic Training and the Investment Research Analyst - United in being Delighted?

Date of publication on LinkedIn: Wednesday, 19th March 2025 @ c.14.35

LinkedIn post link https://www.linkedin.com/pulse/linguistic-training-investment-research-analyst-united-sunil-chadda-vj2xe

How would an Investment Research Analyst trained in Forensic Statement and Linguistic Analysis (FSLA) assess an Earnings Statement versus an Investment Research Analyst who is untrained in this skill?

Consider the two statements below and how they are interpreted.

“We are delighted with progress in China”.

“The Finance Director is delighted with progress in China, as am I”.

You are in a post-Earnings meeting or on the conference call, when the CEO makes the first statement – what do you note? ‘Delighted with China’, or China+ or an equivalent of this.

What would the same Investment Research Analyst write on hearing the second statement? We asked one of our Directors for his thoughts and insight based on his experience. This is what he said:

‘I have been an analyst for 20+ years and I’m pretty sure that I would write the same thing, because the key words appear to me to be ‘delighted with China’’.

Things move quickly in an Earnings Call, the presentation doesn’t stop and give you time to assess, so Research Analysts would be busy writing questions like:

‘Are you talking sales, profits or both?’ 

‘Will you accelerate the roll-out in China?

What does this do to your CapEx guidance?’

‘How quickly can you scale?’

What might sales look like in 5 years etc?’

What they are not doing, because they have not been trained, is to really listen to what is being said. There are two types of listening - Dulled and Active. With the first, you hear but aren’t really listening, while with Active Listening you focus on hearing both the words and context.

If the first statement was used, all the above questions would be relevant. It is exactly what you would want to hear as a shareholder. It is short, it shows unity and is collective with all pulling in the same direction. However, ask yourself, why would the CEO use the second statement and what are the implications of it?

Had I been trained in FSLA, what would I notice and what would I now ask the CEO?

The second statement is notable for both its length as well as the distance the CEO creates between himself and the Finance Director – he is as far away as possible. This implies friction between the two and a divergence in exactly how ‘delighted’ they both are with China. He is creating clear blue water between himself and China – he is not responsible for it, the Finance Director is.

I would now ask:

‘When was the last time you both visited China?’ This would look for shared commitment.

‘Your statement was deliberately phrased – what are your expectations from China?’ These differ from the Finance Director.

‘What does delighted look like to you? The Finance Director is delighted – what would make you feel the same?’

‘What is it particularly about China that delights you?’

‘Why are you not united in being delighted?’

The divergence between the first and second statements would definitely influence our feelings if we were shareholders – doubling the stake in the event of the first and selling the position in the event of the second.

Language in itself is a currency which can reveal much and provides opportunities to negate potential losses in real-time, whilst maximising potential profits.

Contact us to see how we can help you navigate the markets and commercial language.

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Photo Credit: Markus Spiske - Unsplash

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