Mendoza School of Business

Web searches for money words anticipate market moves

Published: April 25, 2013 / Author: Rachel Ehrenberg

The jittery, sweaty-palmed fear of losing money in the stock market leaves a signature in Google search data. Upticks in web searches for finance-related words such as debt, stocks and portfolio are good indicators of an impending downturn in the market, a new study shows. People enter such search terms less frequently before market gains, researchers report April 25 in Scientific Reports.

The new analysis is in line with previous work demonstrating that the frequency of some Google searches, such as those related to the flu, can gauge what a large number of people are worrying about.

Some Internet searches are driven by fear, says economist Paul Gao of the University of Notre Dame in Indiana, who was not involved in the study. “Think about it: When you feel good, you don’t search for words like flu or pharmacy.”

Gao’s own research has shown that it’s possible to predict whether the market will bounce back after a bad day by looking at a set of finance-related Google searches that appear to be motivated by fear. He says that the new work emphasizes the need for research dedicated to investigating how the words used in Internet searches reflect how people decide to take particular actions, including buying or selling stock.

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