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Big Data: Insights into Crowd Thinking and Cashing in on the Stock Market
Researchers at the Warwick Business School have found a connection between search engine trends and real life decision making. The results are similar to earlier research that tries to predict the scale of the outbreak of the flu or the popularity of a new film at the box office using search engine keyword trend information. The researchers claim that analysis of search trends can offer insight into “a range of real-world events.”
Chester Curme, Research Fellow at Warwick Business School, said that “search engines, such as Google, record almost everything we search for. Records of these search queries allow us to learn about how people gather information online before making decisions in the real world. So there’s potential to use these search data to anticipate what large groups of people may do.”
The research suggests that by tracking the search activity relative to some topics in business and politics that the rise and fall of the stock market could be predicted. Searches related to music and weather seemed were found to have no correlation with stock prices.
Suzie Moat, an assistant professor of behavioral science at Warwick Business School, said that “the data we gather from Google gives us unprecedented insight into information large numbers of people are gathering. Our study provides evidence that this information-gathering data can help us develop forecasts of actions people subsequently take in the real world… Increases in searches relating to both politics and business could be a sign of concern about the state of the economy, which may lead to decreased confidence in the value of stocks, resulting in transactions at lower prices.”
