<p>By looking at specific topics people search for on internet, Google can tell you if the stock market is headed for a crash or not.<br /><br /></p>.<p>Researchers from Warwick Business School and Boston University have developed a method to automatically identify topics that people search for on Google before subsequent stock market falls.<br /><br />The method shows that increases in searches for business and politics preceded falls in the stock market.<br /><br />Search engines such as Google record everything we search for.<br /><br />"Records of these search queries allow us to learn about how people gather information online before making decisions in the real world," said Chester Curme, a research fellow at Warwick Business School.<br /><br />In order to enable algorithms to automatically identify patterns in search activity that might be related to subsequent real world behaviour, the team quantified the meaning of every word on Wikipedia.<br /><br />This allowed the researchers to categorise words into topics, so that a "business" topic may contain words such as "business", "management" and "bank".<br /><br />The team used Google Trends to see how often each week these words were searched for by internet users in the US between 2004 and 2012.<br /><br />"By mining these datasets, we were able to identify a historic link between rises in searches for terms for both business and politics, and a subsequent fall in stock market prices," said Suzy Moat, an assistant professor of Behavioural Science at Warwick Business School.<br /><br />According to Moat, the results are in line with the hypothesis that increase in searches relating to both politics and business could be a sign of concern about the state of the economy.<br /><br />"This may lead to decreased confidence in the value of stocks, resulting in transactions at lower prices," he noted.<br /><br />The study was published in the Proceedings of the National Academy of Sciences.<br /><br /></p>
<p>By looking at specific topics people search for on internet, Google can tell you if the stock market is headed for a crash or not.<br /><br /></p>.<p>Researchers from Warwick Business School and Boston University have developed a method to automatically identify topics that people search for on Google before subsequent stock market falls.<br /><br />The method shows that increases in searches for business and politics preceded falls in the stock market.<br /><br />Search engines such as Google record everything we search for.<br /><br />"Records of these search queries allow us to learn about how people gather information online before making decisions in the real world," said Chester Curme, a research fellow at Warwick Business School.<br /><br />In order to enable algorithms to automatically identify patterns in search activity that might be related to subsequent real world behaviour, the team quantified the meaning of every word on Wikipedia.<br /><br />This allowed the researchers to categorise words into topics, so that a "business" topic may contain words such as "business", "management" and "bank".<br /><br />The team used Google Trends to see how often each week these words were searched for by internet users in the US between 2004 and 2012.<br /><br />"By mining these datasets, we were able to identify a historic link between rises in searches for terms for both business and politics, and a subsequent fall in stock market prices," said Suzy Moat, an assistant professor of Behavioural Science at Warwick Business School.<br /><br />According to Moat, the results are in line with the hypothesis that increase in searches relating to both politics and business could be a sign of concern about the state of the economy.<br /><br />"This may lead to decreased confidence in the value of stocks, resulting in transactions at lower prices," he noted.<br /><br />The study was published in the Proceedings of the National Academy of Sciences.<br /><br /></p>