WORD-frequency follows a power-law distribution. Some words (like "man") are very common in English text. Some (like "recidivism") are fairly rare. Two researchers, Aaron Gerow (of Trinity College Dublin) and Mark Keane (of University College Dublin) have found that changes in the frequency distribution reflect stock market movements. Specifically, when stockmarkets climb, journalists' language (as measured by thousands of articles from the Financial Times, New York Times and BBC) gets less diverse, with certain common nouns and verbs (eg, "rise", "fall", "close" and "gain") becoming more common. In other words, journalists move like a herd as investors do.
This is almost useful for the investor. The paper begins
Reputedly, John D. Rockefeller got out of stocks before the 1929 crash when a bellhop asked him for a stock tip, showing the millionaire's canniness as to the causes of stock market bubbles; namely, that they occur when everyone is talking about the market and has the same positive view of it.
But of course everyone knows that stocks rise before hitting a high point and then falling, by the definition of "high point". Timing exactly when stocks will go no higher is how to make money by shorting, and nobody seems to have figured out how to do that repeatably.
Still, it's a cautionary tale for the hacks. When we find ourselves saying "soared" and so forth too many times in row, it might be time to raise a sceptical eyebrow about valuations—to improve your journalism, if not to help you make money shorting stocks. (The Economist's journalists, and hopefully most others, are forbidden to write about securities they invest in.)
A final note: I wrote Prof Keane to ask why language herd-behaviour that built on markets' rise falls apart when markets fall. His response is interesting:
Maybe it's a bit like happy families are all happy in the same way, but unhappy families are unhappy in many different ways. The positive bubble brings about extreme levels of agreement and focus on the same small set of events, much more constrained that the number of events that are usually covered by business journalists. After the crash, perhaps the journalistic focus starts to fan out again to consider a wider variety of (albeit negative) events. That is what you see in the graph after the crash day, a move back to greater diversity over time, as the herd starts to break up.