Predicting The Present With Google Trends

I’m a follower of Hal Varian author of Information Rules and Chief Economist at Google. Earlier in the month he authored a post on importance of predicting the present using google trends.  Mr. Varian is the economist who suggested that the sexiest degress/jobs in the future will be in statistics and data mining.

I feel like this article will be particularly useful for investors applying the Phil Fisher Scuttlebutt approach to investing.

Click Here To Read A Google Research Report On Predicting The Future. (As PDF)

Article Introdcution (Via GoogleResearch.Blog)

The answer depends on what you mean by “predict.” Google Trends and Google Insights for Search provide a real time report on query volume, while economic data is typically released several days after the close of the month. Given this time lag, it is not implausible that Google queries in a category like “Automotive/Vehicle Shopping” during the first few weeks of March may help predict what actual March automotive sales will be like when the official data is released halfway through April.

Even predicting the present is useful, since it may help identify “turning points” in economic time series. If people start doing significantly more searches for “Real Estate Agents” in a certain location, it is tempting to think that house sales might increase in that area in the near future.

Additional Excerpt (Via Google.Research.Blog)

Our paper outlines one approach to short-term economic prediction, but we expect that there are several other interesting ideas out there.

Click Here To Read A Google Research Report On Predicting The Future. (As PDF)