Google Search now can predict Next Stock market Crash

Google Search now can predict Next Stock market Crash

Do you remember Amitabh Bachchan (famous Indian Actor) dialog in “PAA” ( a Hindi Indian Movie)  that “Google se Bach ke kaha Jaoge”  ( Means You cannot escape from Google”).  Yes, now it is true for stock market investor also. By looking at a specific topics (rather Keyword) people search for on internet by using Google search, the new analysis can tell you is the stock market is headed for a crash?

As per the study by the National Academy of Sciences, researchers from Warwick Business School & Boston University have created a method to identify search terms that precede a stock market crash. They have developed algorithms to identify the trend based on search engine. The algorithms based on Wikipedia into different financial topics such as “management,” “business,” & “bank). The institute has done extensive research based on these algorithm & then consulted Google Trends to find spikes in business- and politics-related queries. Based on their study, they have found “rise in certain terms” which can predict stock market falls in advance.

Basis of the Study

Search engines “Google” record everything we search for. Google has supreme leadership position with 114.73 billion search queries or have around 65.2 % market share. China search giant Baidu has 8.2 % and Yahoo has around 4.9 percent%. The method shows that increases in searches proceeded falls in the stock market. Based on Google Search optimization, the researcher applied an appropriate set of keywords related to finance.

Records of these search queries allow the research to learn about how people gather information online before making any investment decisions in the real world. So, there is a link between search & action. These data certainly help to finds trend from what large groups of people may do.

Summary of Observation

1)      The Study was conducted on Political and business related queries between 2004 & 2012.
2)      After date mining, they were able to identify the link between (Historical) rises in search & fall in the stock market price (or crash)
3)      There is a link between political search items and market activity
4)      Based on this study, a model can be developed for other few areas of application

It’s a very preliminary study & certainly, a better & refined model can be develop based on Search

 

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2 Comments to Google Search now can predict Next Stock market Crash

  1. […] Google Search now can predict Next Stock market Crash Do you remember Amitabh Bachchan (famous Indian Actor) dialog in “PAA” ( a Hindi Indian Movie) that “Google se Bach ke kaha Jaoge” ( Means You cannot escape from Google”). Yes, now it is true for stock market investor also. By  […]

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