Via LearnVest By Jacqui Kenyon ~
Seeing what others are searching for on Google can be pretty entertaining there’s even an internet meme dedicated to it.
But Google search histories offer more than laughs. A recent study in Scientific Report finds that the dips and spikes in the volume of search terms can affect your portfolio.
CNN Money reports that the study’s researchers examined the popularity of different search terms with Google Trends. The ultimate conclusion? They discovered search metrics can signal when the market is going to rise or fall.
Between 2004 and 2011, when the number of people searching terms like “debt” and “unemployment” increased, the market reflected that sentiment and plunged. When the number of searches for these terms fell, the market rose.
Frequency of search can also indicate when investors plan on parting ways with their stocks. For instance, when many people are Googling “NASDAQ” or “inflation,” it’s fair to expect an increase in selling.
The most telling term in the study was “debt”: When researchers made a hypothetical investment based on the fluctuation of “debt” on Google Trends, they earned a 326% profit.
But don’t give up your day job to start a Google Trends hedge fund just yet. Researchers caution that as new words enter the public lexicon, “debt” and the other terms studied may not have the same market effects they once did. In other words, past performance does not guarantee future results.