Unlike facebook, Google allows you to access much of their data. Google’s mission is to organize the world’s information and make it universally accessible and useful, not to garner information about you in order to make money. As we talked about in class, Google’s data can be used to predict amazing things, such as if there is going to be an outbreak of the flu. Simply by looking at their search queries, Google is able to make some pretty amazing predictions.
It has recently been found that by using Google trends one can accurately predict what will happen in the market in the short term. If you have a free Google account you can access Google trends and by typing in keywords you can see how many times people searched those particular words. By looking at the trends and seeing for instance that there is an uptick in the searching of the word debt than you can anticipate that the market will go down in the near future. If you were to know that the market is going to plunge than by shorting it you could find yourself making a fair amount of money. Just three years ago you would not have been able to adequately predict the market because the data at the time was not large and fast enough. Data in its nature is getting bigger and faster which now allows one the ability to predict which way the market will go with decent certainty. Financial data is coming in every second during a trading day and this quick, high volume data is allowing many to more accurately predict the market. For instance, everyday computers use up to the second information for high frequency trading where they hold their investment position for seconds or only a fraction of a second. Data is certainly changing the marketplace and reshaping the way many invest.
For years, economists would wait each month for government data releases on economic conditions. Now, by looking at what people are searching one can estimate the economic condition because there is simply enough data to make a reasonable conclusion. By using search results for financial terms on Google trends a group of researchers were able to increase their hypothetical portfolio by 326 percent whereas a constant buy-and-hold strategy yielded just a 16 percent return. Big Data is something that we did not have ten, even five years ago to the extent we do today. It is truly scary what we are able to predict with all this data. A person who can properly mine this data could make some seriously mad money. Enough that would even make old Jim Cramer proud.
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