Google Search Terms Can Predict the Stock Market
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Google Search Terms Can Predict the Stock Market
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Re: Google Search Terms Can Predict the Stock Market
#2I was thinking of something very similar the other day but in regards to bitcoins. They are very volatile at this stage and whenever they're in the public eye they either seem to increase or decrease in value. Perhaps somebody could perform a study as to a relation between the volume of bitcoin related search terms and it's market value.
Re: Google Search Terms Can Predict the Stock Market
#3Cool paper, but the fact that a silly keyword like 'color' is so significant without an author explanation makes me question their results. I really wish they dug deeper and explained unintuitive results like that. There may be a bug in their experiment.
Also, why would they use the Dow Jones Industrial Average? It is a ridiculously bad average of stock market performance for many reasons. This planet money podcast goes into why:
http://www.npr.org/blogs/money/2013/03/12/174139347/episode-...
Re: Google Search Terms Can Predict the Stock Market
#4How do you get access to google search terms for something like this? Also, anyone have any other hypothesis about search terms that would predict movement?
Re: Google Search Terms Can Predict the Stock Market
#5I was thinking of something very similar the other day but in regards to bitcoins. They are very volatile at this stage and whenever they're in the public eye they either seem to increase or decrease in value. Perhaps somebody could perform a study as to a relation between the volume of bitcoin related search terms and it's market value.
I'm actually looking into this a little right now since I happen to work for a media monitoring company. I can tell you there is a definite correlation between them, but haven't been able to determine if it's a leading or lagging indicator.
Re: Google Search Terms Can Predict the Stock Market
#6How do you get access to google search terms for something like this? Also, anyone have any other hypothesis about search terms that would predict movement?
http://www.google.com/trends/
Hal Varian, Google's chief economist, has been talking about using Google Trends this way for a while: http://www.frbsf.org/economics/conferences/1103/Varian-part_...
Re: Google Search Terms Can Predict the Stock Market
#7Google search terms could also predict a completely random time series. You just have to pick the right search terms.
If you look at enough words the chances, that some of them have predictive value approaches 100%.
Re: Google Search Terms Can Predict the Stock Market
#8How do you get access to google search terms for something like this? Also, anyone have any other hypothesis about search terms that would predict movement?
You use Google Trends:
http://www.google.com/trends/
What's interesting is that I had this exact idea with precious metals. The frequency of the terms searched (like gold or buy gold) matches the gold spot market index impressively closely.
Re: Google Search Terms Can Predict the Stock Market
#9Cool paper, but the fact that a silly keyword like 'color' is so significant without an author explanation makes me question their results. I really wish they dug deeper and explained unintuitive results like that. There may be a bug in their experiment. Also, why would they use the Dow Jones Industrial Average? It is a ridiculously bad average of stock market performance for many reasons. This planet money podcast g…
Lots of people use the Dow precisely because it is a bad indicator. If they don't like the conclusion they get with something better, like the W5000 or the S&P500, they can try it again with the Dow for a "second opinion."
The whole methodology is a joke anyway. If you evaluate a huge number of search terms, some of them are going do better than others. So terms that might mean something ("debt") get mixed up with terms like ("color") that got lucky.
What you have to do is come up with one strategy that trains a classifier on the combined words, tunes it up with logistic regression and derives optimal trading actions from that. And you've got to factor in what you're paying to the broker and the market makers.
Re: Google Search Terms Can Predict the Stock Market
#10I was thinking of something very similar the other day but in regards to bitcoins. They are very volatile at this stage and whenever they're in the public eye they either seem to increase or decrease in value. Perhaps somebody could perform a study as to a relation between the volume of bitcoin related search terms and it's market value.
As soon as someone figures out bitcoin derivatives (e.g. options), you'll be able to buy or sell the volatility. More broadly, such a development may also stabilize those price fluctuations.