Unscrambling Codes: From Hieroglyphs to Market News

This paper reviews some steps that paved the way for the development of sentiment analysis (or opinion mining), a technique apparently used by Jim Simons’ Medallion fund for scoring an ‘impossible’ performance: a 66% annual average rate of return in the 31 years between 1988 and 2018. Sentiment analysis is a powerful tool that uses natural language processing (NLP), or computational linguistics, to determine whether a text is positive, negative or neutral about a company and, in ultimate analysis, to discover stock prices patterns. Here we trace back its origins to some tools invented during past centuries to recognize the meaning of symbols used by humans to communicate, plainly or secretively: Egyptians’ hieroglyphs, Julius Caesar’s cipher, Fibonacci’s abbreviations, Mary Stuart’s code.