

Google Has Own $26.5bil Trading Floor, Predicts Market With Search Data?  - cl3m
http://www.ozcarguide.com/business-money/investing/3241-google-trading-floor

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tewks
There is a story told, I think in Ken Auletta's book, by Eric Schmidt from the
earlier days of the company where Sergey proposes starting a hedge fund
because they have so much better data than anyone else. Schmidt cautions
against the notion due to perhaps significant legal implications.

Something that would perhaps counter this are complaints on zerohedge and
elsewhere that Goldman's privacy policy on some of its data services leave
open the possibility for them to use usage data for prop trading.

There must be people within Google wondering that if others are getting away
with this, why can't they? There must also be people worried about the
company's dependence on a single source of revenue...

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rs
Aren't they kicking off the trading floor to manage their cash, rather than to
becoming a hedge fund/investment bank ?

I remember reading an article in the recent past where they have hired some
ex-IB traders (Goldmans, Lehmans, etc) to run their Treasury department.

The new hires were due to the fact that they were changing their risk profile
of their portfolio. I read they were looking for some bond traders as they're
planning on moving towards corporation bonds rather than treasuries/govvies.

I need to look for that article.

~~~
haasted
<http://news.ycombinator.com/item?id=1385741>

[http://www.businessweek.com/magazine/content/10_23/b41810335...](http://www.businessweek.com/magazine/content/10_23/b4181033582670.htm)

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ThomPete
After reading "The Black Swan" by Taleb and finally understanding some of the
issues with predictability. These kind of claims just sound like astrology to
me.

brown9-2-2 is right the latter part of the headline is pure speculation.

~~~
hegemonicon
Careful. "The Black Swan" is a pop non-fiction book, and reading it won't give
you an intimate understanding of markets. Taleb has taken his share of
criticism (<http://www.efalken.com/papers/Taleb2.html>) and his ability to
capitalize on the deep insights he'd like you to believe he has is somewhat
questionable ([http://www.businessinsider.com/did-nassim-talebs-universa-
ge...](http://www.businessinsider.com/did-nassim-talebs-universa-get-killed-
on-thursdays-big-bet-2010-5))

~~~
ThomPete
Let me put it like this. If the market where predictable we would live in a
very different world.

So the proof is in the pudding. No one predicts markets unless they somehow
control them.

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brown9-2
The latter part of this headline is nothing but speculation in the article.

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dreeves
As to the question of whether Google could exploit their search data to
predict the stock market: <http://messymatters.com/searchpred> (summary: not
really)

~~~
wdewind
Slightly less short summary:

In some things search can add a slight benefit to predictive analysis (from
the current baseline strategy), in others it doesn't really help at all and
even in the cases it does it's only marginally useful, "we find search volume
on its own is predictive of future outcomes, but search is nevertheless
outperformed by baseline models trained on publicly available data; combining
search and baseline models generally leads to modest improvements."

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known
Is Google following RedHat?

[http://saviorodrigues.wordpress.com/2009/03/09/is-red-
hat-a-...](http://saviorodrigues.wordpress.com/2009/03/09/is-red-hat-a-
software-firm-or-financial-institution/)

------
meric
Hmm I remember reading somewhere before about Google Venture's acquisition of
(or rather, investment in) a startup company who was working on a product that
could predict future events. Maybe with this Google can predict markets as
well. link:
[http://www.nydailynews.com/money/2010/05/04/2010-05-04_googl...](http://www.nydailynews.com/money/2010/05/04/2010-05-04_google_invests_in_company_that_tries_to_predict_the_future.html)

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joe-mccann
Could Google be using their search data for...

equals

easiest way to drive traffic to your site.

Quite frankly, data that is scraped and analyzed by the algos and quant funds
is probably much more relevant, but it does not mean Google could not define a
strategy based on search data; however, it is pure speculation and link bait
to just throw the assertion out there willy nilly.

~~~
wdewind
Agree 100%, without actually showing how search data would be used it's kind
of pointless. At first though it seems OBVIOUS that they'd be using search
data, but when you actually think about it, what would the application be?
Would the market effects in search show up fast enough to be relevant to the
market? And for HFT it's useless.

Would be more that interested in being proven wrong.

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jayruy
This is nonsense - I know people in quant funds who have tried to do things
like this. All the boring stuff that Google doesn't care about, like SEC
filings and Quarterly Reports, matter _far_ more than aggregate attention. I'm
sorry but if you're making decisions for a multi-million dollar fund, and you
tell investors that your investments are based on the twitterings of the
unwashed masses, you'll be sent home before you've had your lunch.

Even if there is value in their data (and I do imagine enough PhD's could find
some reasonable strategies) - there would be such a public outcry that it
wouldn't be worth it from a PR perspective.

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aresant
In terms of them predicting markets with search data lots of commentators are
saying no way, but I strongly disagree.

Google can predict flu-like illnesses within 92% accuracy of CDC data which is
dervied from labratory testing.

Furthermore trading stocks seems to me to be a behavior that would be easy to
predict through Google's "intent-based" algorithms used for serving
advertising.

EG - For instance knowing how many searches there are a day for "is AAPL
overpriced" vs. "is AAPL underpriced" you'd have data that would begin to
correlate to market value - with enough data points you could make some pretty
darn educated guesses about what a given stock would do.

Toss in a hundred PHDs, a few dozen traders from the greediest depths of
wallstreet and the question shouldn't be CAN they do it, but WHEN will they do
it.

Reference:

[http://pagingdrgupta.blogs.cnn.com/2010/05/18/how-
accurate-i...](http://pagingdrgupta.blogs.cnn.com/2010/05/18/how-accurate-is-
google-flu-trends/)

~~~
chollida1
> For instance knowing how many searches there are a day for "is AAPL
> overpriced" vs. "is AAPL underpriced" you'd have data that would begin to
> correlate to market value - with enough data points you could make some
> pretty darn educated guesses about what a given stock would do.

You may be right but the only thing that really moves the market is the large
institutional funds. None of these funds are going to do a google search for
"Is apple overpriced" and then say OMG we've got to sell apple now.

~~~
Create
Fact: some non-US companies explicitly forbid their people to search using
google, especially patents through google's service.

~~~
paulgb
Interesting fact, happen to have a source?

~~~
Create
NDA, but remains a fact, nevertheless...

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starkfist
The search data is probably less useful than all the other data they have
regarding how much money individuals and corporations will pay for various
words. Or all the private email they process for "other purposes relating to
offering you Gmail".

