The stock market has always been governed by the whims of popular trend, and it has always been the responsibility of investors to predict the public’s whimsy well ahead of time. Though it’s true that many investors can ride the wave of already-burgeoning public taste into moderate wealth, the best investors are those who get in on the ground floor. This latter class of investors works on honed talent and instinct for public emotion, but they also take full advantage of the resources at their disposal. Because of its ubiquity nowadays, Google has become one of those indispensible resources. So many people uses Google, and thus Google has been able to create a database of searched terms that allow savvy investors to peruse popular topics. If you are just starting out in the stock market or you’d like another arrow in your quiver of research tools, here are all the reasons that you just need to open up your browser and start a search.
Allowing Unprecedented Access to Public Psyche
In recent years, Google has popularized the now-pervasive custom of search complete, which predicts what Internet searchers are trying to find before they’ve written it all out. Google does this by compiling tons and tons of data on what previous searchers have looked for as well as factoring in current trends and sentence or word constructions.
Initially, Google used this data only internally to improve its ability to provide more accurate searches, but recently the search goliath has given the public access to its extensive search records — which is a major coup for investors. Instead of being popular culture vultures or just guessing about the “next big thing,” investors can find out exactly what’s hot and what’s not with Google tools like Google Insights or Google Trends. Then, after locating the appropriate stock options, wily investors will stay tuned to their investments with other online resources like trackers from Trends Investing.
To utilize Google’s search tools effectively in your stock market research, come prepared with a few industries and related key terms. For example, if you’re thinking about investing within the pharmaceutical industry, after you check out the historical stock prices of a few major companies to verify the health of the industry in the market, you might look into more niche companies to see if their products are generating any buzz. In Google Trends, if you see a small uptick in the amount of searches for a certain concept, it might be wise to act fast and buy in. However, if the line graph is jaggedly declining or staying steadfastly straight, you might think about investing elsewhere.
Predicting Stock Market Crashes
Recent new research has shown just how accurate Google is at predicting certain market downturns. The research team compiled every word they could find on Wikipedia and sorted words into different categories. The team looked specifically for terms related to business and politics — a grouping that would include words like “management” or “bank.” The team then analyzed Google Trends for searches containing these words during the eight-year time span of 2004 to 2012. They discovered a crucial correlation between the frequency of searches of these terms and changes in the stock market.
The researchers believe that the correlation exists because an increase in searches for this type of information indicates a general feeling of unease and distrust in the current economic climate. When people are uncertain about the stock market’s profitability, they tend to pull out their investment, creating a downturn and possible crash.
Though this research hasn’t yet provided a foolproof algorithm that predicts an oncoming crash, the research team members are working hard to make a more automated service. They believe that this technology could potentially work hand-in-hand with automated trading strategies to the benefit of any and all stock market investors.
We know now that Google is much more than a search engine — it’s even more than a multi-billion-dollar company. Google has made itself an invaluable research tool for resourceful and savvy investors looking to get in on the ground floor of future trends. If you’re looking to expand your portfolio, why not open up your browser and try your hand at discovering the next market bubble?