Friday, July 17, 2009

Predicting the Present

The coming posts to Markets with Search will provide further analysis similar to the jobless trends data. These analyses aim to provide actionable data-oriented plays on the market. Before getting into more, it is important to note some other sources that are out there for your reading. I’ll be posting these kinds of articles intermittently.

The Chief Economist of Google, Hal Varian, has published “Predicting the Present with Google Trends.” This whitepaper embodies the power of the real-time nature of internet data; we can increase transparency into lagged data. In this post, Varian explores how to predict auto sales, home sales, retail sales, and travel behavior using the wisdom of the online crowd.

All of these factors can issue trade ideas. Play around with your ideas on Google Insights or Microsoft xRank.

Enjoy the light weekend read.

3 comments:

  1. Is this one of those secrets that once gets out becomes not so useful? Would it be possible for a small team of short sellers to game the system by pumping queries into Google to distort the statistics? A suitably timed stimulus along these lines would be almost undetectable statistically.

    Nevertheless, this sounds like an excellent idea. I like it.

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  2. That is a valid concern; and not limited to just short sellers - any market maker could try. While the sheer volume needed to move the dial would be incredibly substantial given the billions to trillions of searches on a given day, I think that this problem could be addressed by implementing spam filters into your strategies, should the need arise.

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