Reading the company's 10-K filing for negative-sounding words — companies whose MD&A is unusually negative tend to underperform.
Loughran-McDonald 2011 built the standard financial-sentiment dictionary (after showing that general English sentiment dictionaries fail catastrophically on financial text — "liability" is not a negative word in finance). Li 2008 showed that 10-K MD&A negativity has predictive power. We score the tone of the most recent 10-K MD&A section using LM-2018 dictionary; high negativity = bearish.