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Facial Analysis: Wall Street's Next Big-Data Tool

Researchers at the New Jersey Institute of Technology are analyzing facial expressions of corporate execs, as well as other data streams, to forecast stock market trends.

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Facial expressions can provide a window into a person's unspoken thoughts. But can these nonverbal tells provide real-time insights for financial traders?

That's the goal of New Jersey Institute of Technology (NJIT) researchers, who are developing ways to filter and analyze corporate data to forecast future market trends. This big-data effort encompass a variety of information streams: including video of a CEO's presentation during a quarterly analyst call, in which analytics software scrutinizes the chief executive's facial or tonal changes; real-time speech-to-text conversion of the CEO's comments; and a live feed of the company's stock price and other market data.

This effort includes the work of Dr. James Cicon, an assistant professor of finance at NJIT's School of Management. Cicon focuses primary on empirical corporate finance.

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"Specifically, I look at boards of directors, CEOs, things like that," said Cicon in a phone interview with InformationWeek. "That's my big interest. I try to see if I can get more information to put in our financial models than perhaps [companies are] explicitly providing."

During a quarterly analyst call, for instance, real-time facial analysis would require a meticulous and speedy examination of a speaker's rapidly changing expressions, a task the NJIT system is designed to do.

"We track certain areas of the face," Cicon explained. "We look at the eyes -- the shape the eyes take during the course of the interview. We look at the eyebrows. We look for a downturned or widening mouth, or upturned lips."

NJIT's software extracts measurements of primitive emotional states, such as disgust, fear, and surprise. Its analytical capabilities are based in part on research conducted decades ago by renowned American psychologist Paul Ekman, who developed a comprehensive system for describing observable facial movements for emotions. "We can measure those facial expressions," said Cicon. "It's kind of straightforward if you have the machinery to look at a face and compare [it] with what Paul Ekman says a fearful face looks like."

Real-time measurement of emotions could prove useful in many fields, such as law enforcement and stock trading. A fearful-looking CEO on a conference call, for instance, might interest Wall Street traders hoping to profit from the manager's facial clues.

"You could take these primitive Ekman measures and combine them into higher-level measures as well," said Cicon. "For example, what we'd like to do is have a… lie detector running, or something like that. Does the manager believe what he's saying? This would be very useful to an investor."

Wall Street types could combine facial analysis with data from other sources as well. "You might do a live transcription where you take the manager's voice… and create a text stream from the words being said," Cicon said. "We can do content analysis of someone's speech to determine emotional states as well."

Given its ability to detect emotion states from a distance, facial analysis might have a future in law enforcement, too. "You can't hook someone up to a lie detector without their permission, so what we see is some type of a lie detector application. We wouldn't necessarily call it a lie detector. We might call a 'measure of sincerity.'

"Sincerity is the difference between what you're saying -- your words -- and what your face is expressing. A person who is saying one thing, but whose face appears to be telling us something else, might be considered 'insincere.' "

Facial analysis will soon find its way into real-world applications, Cicon predicted. "You have an academic paper written about something, and a couple of months later [stock] traders are using it as fast as they can. They recognize that academic research adds a lot of value to their work and gives them an advantage."

Apply now for the 2015 InformationWeek Elite 100, which recognizes the most innovative users of technology to advance a company's business goals. Winners will be recognized at the InformationWeek Conference, April 27-28, 2015, at the Mandalay Bay in Las Vegas. Application period ends Jan. 16, 2015.

Jeff Bertolucci is a technology journalist in Los Angeles who writes mostly for Kiplinger's Personal Finance, The Saturday Evening Post, and InformationWeek. View Full Bio

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Gigi3
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Gigi3,
User Rank: Ninja
12/8/2014 | 4:40:47 AM
Re: Speech Recognition already used when you call your insurance company
"I wonder if the system could be duped. You could then fake fear to convince facial analysts to sell when they shouldn't."

Thomas, eventhough we are saying face is the mirror of heart/feelings; how many people express it correctly. Most of the top level peoples may have either a smiling face always by hiding the real facts or grievances.  
Gigi3
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Gigi3,
User Rank: Ninja
12/8/2014 | 4:37:21 AM
Facial Analysis
"Facial expressions can provide a window into a person's unspoken thoughts. But can these nonverbal tells provide real-time insights for financial traders?

Jeff, is it possible? I won't think it can be hundred percentages accurate. I know (Have witnessed) many CEO's share smart smile to employees while signing the termination letters. Certain peoples wont  show what they have in their inner heart.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
12/8/2014 | 2:26:29 AM
Re: Speech Recognition already used when you call your insurance company
"If the system works correctly" being the key phrase.

Polygraphs can be faked out too (not to mention are notoriously unreliable).  There's no reason to think that a good actor couldn't fool a facial recognition system.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
12/8/2014 | 2:22:43 AM
Re: Speech Recognition already used when you call your insurance company
Or, for that matter, fake optimism.

It reminds me of competitive duplicate bridge.  ACBL rules dictate that all bids and plays must be made smoothly and unexpressively -- not only so that partner not be given unauthorized information, but also so that opponents (for whom, admittedly, such information would not be unauthorized) may not be "faked out."
jastroff
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jastroff,
User Rank: Ninja
12/6/2014 | 8:54:52 PM
Re: Speech Recognition already used when you call your insurance company
>> I wonder if the system could be duped. You could then fake fear to convince facial analysts to sell when they shouldn't.

 

If the system works correctly, it will set the context correctly so it can detect fakery. 
Thomas Claburn
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Thomas Claburn,
User Rank: Author
12/5/2014 | 5:07:40 PM
Re: Speech Recognition already used when you call your insurance company
I wonder if the system could be duped. You could then fake fear to convince facial analysts to sell when they shouldn't.
Whoopty
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Whoopty,
User Rank: Ninja
12/5/2014 | 12:19:47 PM
Facial camouflage
There's been a lot discussion about cameras that can track faces and identify you based on that alone and that's led to some really interesting uses of makeup and fashion to create facial profiles that are impossible to decipher for a computer. 

I wonder if we'll start to see new fashion trends emerge in the future that cater to the people who want to be anonymous. Of course there would need to be a good few of them otherwise it would be a little redundant.

You can't be the only anonymous person. 
MedicalQuack
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MedicalQuack,
User Rank: Moderator
12/4/2014 | 11:55:04 PM
Speech Recognition already used when you call your insurance company
You may or may not be aware of the software now used by most insurance companies but when you say yes to this call may be recorded, it's turning a million algorithms loose to analyize your current state of mind via your voice.  It's supposed to match you up with a representative that's likely to be able to work with you better...it may do that, but more importantly, the analytics score you and then they have data of scored voices to sell to behavioral analytics folks, been going on for a while and is part of the data selling epidemic in the US for profit.

So add on facial recognition for this too?  Yup could be fun and I read the other day about consumer video conversations with your bank so yeah, add this one and now we have video files to add to the voice files that already get sold...it's all about money on the back side.  I think I'll pass on video with my bank:)  Who knows they could also be using the same voice software as well.  Cigna did a whole deal a couple years ago bragging about it.  There's a good video at the link here from Christopher Steiner and he brings up some good points, like when does an algorithm cross the line from being a utility and become a menace...

http://ducknetweb.blogspot.com/2014/05/this-call-may-be-recorded-for-quality.html

Oh and by the way the voice software claims too that it can tell at a rate of about 75% accuracy if you have prostate cancer too...that may be pushing it a bit far but imagine that data being sold too..lol...
danielcawrey
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danielcawrey,
User Rank: Ninja
12/4/2014 | 6:35:09 PM
Wow
Seems like facial recognition could be a scary tool. It raises some privacy questions, although how private are our facial expressions?

I think with a technology like this being used in public places and implemented in interesting ways we are going to find this out soon enough. 
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