Google search terms predict financial market moves

Tobias Preis of Warwick Business School, has found that the frequency of certain financial terms in Google searches can predict market movements. So, if you want to beat the market, just count the occurence of words such as “revenue”, “unemployment” etc…

I have no doubt this type of “taking the temperature” of the market by means of term frequency could work very well – after all, most market movements are not based on logic or even business outcomes, but on the emotions of the crowd, and using Google search term frequency seems to me as an excellent way to “get a feeling” of what the crowd feels… In short, financial markets are a “beauty contest” to a large extent.

Btw, the author Robert Harris explored exactly this idea in his 2012 thriller “The Fear Index“.

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About swdevperestroika

High tech industry veteran, avid hacker reluctantly transformed to mgmt consultant.
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