Home Forum Research Let’s talk about hype Reply To: Let’s talk about hype

Blair Fix
    • Topics started: 6
    • Total posts: 87

    Very interesting research, James. Here are some possible ways to measure hype that would work with negative values:


    prediction = predicted EPS
    actual = actual EPS
    abs = absolute value

    Hype as the log of absolute value of the prediction error

    hype = log( abs( prediction – actual) )

    Same thing, but as a fraction of the absolute value of the actual EPS

    hype = log( abs( prediction – actual) / abs(actual ) )

    With these definitions, ‘hype’ becomes a general measure of prediction error, which is not necessarily what you want. But as Scott notes, prior to taking the absolute values, you could record the sign of (prediction – actual), and then add it back after taking the log. That way, you distinguish between pessimism and hype and also constrain the spread in the measurement.