Many many moons ago I had a similar idea, although my idea was to spot patterns of eBay purchases. I had a feeling that people in various parts of the world would buy certain types of items depending on economic trends. Once I had identified purchasing trends, it seemed to me that I might be able to predict trends.
Google Search Terms Can Predict the Stock Market
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Re: Google Search Terms Can Predict the Stock Market
#12Ignoring methodology concerns for a moment, there have been times in the past where people have found statistical regularities like this in the stock market. Sometimes people have made money on these discoveries. If not someone else will as soon as the researcher publishes. But making money on them gets rid of them, and given that this is now publicly available information those regularities certainly no longer exist, if they ever existed in the first place.
EDIT: Ok, I couldn't resist the xkcd reference: http://xkcd.com/882/
Re: Google Search Terms Can Predict the Stock Market
#13Out-of-sample backtest or it didn't happen. Out of a bunch of random search queries, chances are several of them will be "predictive" of futures moves in an index. Big whoop.
Re: Google Search Terms Can Predict the Stock Market
#14[deleted]
Re: Google Search Terms Can Predict the Stock Market
#15Ignoring methodology concerns for a moment, there have been times in the past where people have found statistical regularities like this in the stock market. Sometimes people have made money on these discoveries. If not someone else will as soon as the researcher publishes. But making money on them gets rid of them, and given that this is now publicly available information those regularities certainly no longer exist…
An economist and his friend are walking down the street when the friend sees a ten dollar bill on the sidewalk.
“Look,” he says, “it’s a ten dollar bill”. “Nonsense,” says the economist. “If that was a ten dollar bill, someone would have picked it up by now.”
Re: Google Search Terms Can Predict the Stock Market
#16Related: The time Eric Schmidt said
"One day we had a conversation where we figured we could just try to predict the stock market, and then we decided it was illegal. So we stopped doing that."
Re: Google Search Terms Can Predict the Stock Market
#17Been playing around with google trends and trading for a little while now, and there could be something to this.
If anyone in SF is also into this stuff, we should grab coffee. Email is antonlakin at gmail.
Re: Google Search Terms Can Predict the Stock Market
#18Related: The time Eric Schmidt said "One day we had a conversation where we figured we could just try to predict the stock market, and then we decided it was illegal. So we stopped doing that."
Or it would cannibalize their real business, reputation-wise. Imagine if Quicken started trading TurboTax data...
Re: Google Search Terms Can Predict the Stock Market
#19Cool 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 te…
Sometimes known as data dredging. https://en.wikipedia.org/wiki/Data_dredging
Re: Google Search Terms Can Predict the Stock Market
#20Ignoring methodology concerns for a moment, there have been times in the past where people have found statistical regularities like this in the stock market. Sometimes people have made money on these discoveries. If not someone else will as soon as the researcher publishes. But making money on them gets rid of them, and given that this is now publicly available information those regularities certainly no longer exist…
An economist and his friend are walking down the street when the friend sees a ten dollar bill on the sidewalk. “Look,” he says, “it’s a ten dollar bill”. “Nonsense,” says the economist. “If that was a ten dollar bill, someone would have picked it up by now.”
I'm (and economists) aren't saying that there are never $10 bills on the sidewalk, just that they don't stay there for long after someone notices them. Stock prices went down on the weekends for decades before someone noticed. But once it was noticed it stopped pretty quickly.