Analysis of Google search-data can yield stock tips

Author: Dan Mitchell

Finance academics propose mining Google data to measure how much attention stocks are getting and even how much they'll rise. That may work great -- for a while.

FORTUNE -- As occupiers step up their occupations of Wall Street and other places across the U.S., demanding that the financial industry be held accountable for putting the economy at risk and for sucking up the nation's wealth at the expense of the "99%," a couple of finance professors have taken on the important question of whether analyzing Google (GOOG) search data can actually help investors guess which stocks will rise.

Their answer is yes. "We propose a new and direct measure of investor attention using search frequency in Google," write Notre Dame University's Zhi Da and Paul Gao in the Journal of Finance. Freakonomics characterizes the study as concluding that analyzing Google search data is a "better, more direct method of measuring investor attention (a precursor to buying the stock) than traditional, indirect methods of measurement, such as news and advertising expense."

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