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Google Search Predicts Market...
Old 04-25-2013, 02:27 PM   #1
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Google Search Predicts Market...

Very interesting paper from Scientific Reports:

Quantifying Trading Behavior in Financial Markets Using Google Trends : Scientific Reports : Nature Publishing Group

Conclusion:
When search volume on financial terms goes down; market goes up.
When search volume on financial terms goes up; market goes down.

Didn't include trading costs in the analysis, but hard to argue with +326 vs +16 for buy and hold...



Big Data!
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Old 04-26-2013, 07:52 AM   #2
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Surprised nobody commented....

I thought at least the linkage between the psychological/broad behavior and market performance was interesting as was the use of Big Data in a way it had never been used before might have peaked some interest....

Huh.
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Old 04-26-2013, 08:10 AM   #3
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I just saw your original post this morning. It is interesting that the Google search data is available and is useful enough to correlate to market performance trends. I am not sure that they have demonstrated a direct causation. I expect someone will take this correlation and determine what the causation link is. At that point, I can foresee the day ( if it is not already here) that somebody uses this information for market timing. Thanks for the post!
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Old 04-26-2013, 08:41 AM   #4
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Actually the " web bot " project has been around for a while and supposedly originated to predict the market. Web Bot Project - RationalWiki

Psychology plays a lot into market moves ( witness the flash crash this week from a bogus twitter ) so tracking internet searches is somewhat like looking to what people are thing about at the time.
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Old 04-26-2013, 11:22 AM   #5
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Interesting paper although I just scanned it. I'm guessing that these sorts of ideas are being exploited now by people with resources to throw at it.
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