For fundamental equity investors, the financial statement is the launchpad for the search for value. True, quants use financial statements too. But they spend less time on what the numbers mean, than on what they are. To produce a financial statement that adequately captures the economic (not GAAP or IFRS) position of a company is no mean feet and draws upon accounting, domain knowledge, and artistry. Data scientists and machine learning engineers are more than acutely aware of the chore of data processing and cleaning.
We start a new series on neural networks and deep learning. Neural networks and their use in finance are not new. But are still only a fraction of the research output. A recent Google scholar search found only 6% of the articles on stock price price forecasting discussed neural networks.1 Artificial neural networks, as they were first called, have been around since the 1940s. But development was slow until at least the 1990s when computing power rapidly increased.