

Google searches predict market moves - taheris
http://www.nature.com/srep/2013/130425/srep01684/full/srep01684.html

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lutusp
> Google searches predict market moves

Your title doesn't reflect the article's title or its content, and is wrong in
any case. No source can reliably "predict" the market's moves. Some sources
can be shown to be correlated with the market after the fact, but that's very
different -- among other things, it can't be used to guide advance actions
like a real prediction would.

My advice -- avoid associating the words "predict" and "market" in anything
resembling serious writing.

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taheris
You're right, I could have chosen a better title. This article may have been
looking at correlations after the fact, but the conclusion is that present
changes in search volume can provide insight into future market movements.

Of course, any real opportunity for a profitable trading strategy using this
information would be quantified and reflected in prices, so I don't expect the
results to persist over time, but I found the findings interesting
nevertheless.

~~~
lutusp
I didn't mean to be critical, but I've done some research on this topic, and
one hears far too often the claim that the market can be predicted. It can't,
not in any consistent or reliable way. If it could, the market would collapse
-- businesses would refuse to try to raise capital using equities.

The efficient market hypothesis (EMH) says the market can't be gamed or
predicted. No one knows whether the EMH is a legitimate theory or has an
effect on the real market, but one thing is certain -- if there was a way to
reliably predict the market, it would collapse. The market's very existence
depends on the idea that all investors are equal and no one can (legally) game
the system.

> This article may have been looking at correlations after the fact ...

That's one of the trickier aspects of investing -- the regularity with which
one hears of a correlation that pops up after the fact, and the implication
that it might have been exploitable in advance. But _ex post facto_
correlations are just that, nothing more. They even have a name for it --
Monday morning quarterbacking.

