Google Can Predict Market Crashes


WASHINGTON: 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.

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.

The method shows that increases in searches for business and politics preceded falls in the stock market.

Search engines such as Google record everything we search for.

"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.

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.

This allowed the researchers to categorise words into topics, so that a "business" topic may contain words such as "business", "management" and "bank".

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Source: IANS