Google Can Predict Market Crashes
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.
"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.
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.
"This may lead to decreased confidence in the value of stocks, resulting in transactions at lower prices," he noted.
The study was published in the Proceedings of the National Academy of Sciences.
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