November 15th, 2010
03:44 AM GMT
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(CNN) - Economics, in a broad sense, is the study of how the financial decisions of billions of individuals coalesce into large trends that shape the way money is created, destroyed or transferred around the globe.

In that vein, physicists in Germany and the U.S. have released a study that shows how individual searches on Google correspond to large movements on the stock market.

The joint study by researchers at the Johannes Gutenberg University in Germany and the Center for Polymer Studies at Boston University looked at the stock moves of S&P 500 companies and compared them with searches of the company names on Google Trends from 2004 to 2010.

“Search engine query data offer insights into our economic life on the smallest possible scale of individual actions,” wrote the authors of the study, which was published Monday in the Philosophical Transactions of the Royal Society in the UK.

The researchers found the search activity on a particular company name increased in tandem with increased trading activity of the company stock as a whole - whether the stock price went up or went down. “Increasing transaction volumes of stocks coincide with an increasing search volume and vice versa,” the study authors wrote.

“Thus, one can conclude that search volume reflects the present attractiveness of trading a stock. But it seems that neither buying transactions nor selling transactions are preferred when one detects an increased volume,” the study said.

So, it appears to confirm both that news moves markets and that stock movements follow the herd. Only now the herd eats at the trough of constant information that’s a Google search away.



soundoff (23 Responses)
  1. Mark Carter

    Can someone point me to the journal this study was published in?

    November 15, 2010 at 4:22 am |
  2. Rex Remes

    Has anyone used one bit of common sense and thought "hey, company XYZ's stock went up a lot on a certain day, so therefore, people saw this and did some searching about it"??

    What a poorly written article. Basically useless information (and I use the word "information" loosely).

    November 15, 2010 at 5:44 am |
  3. Vanist

    Searching predicts stock market moves .. or .. stock moves lead to more searches??

    November 15, 2010 at 5:50 am |
  4. samuel

    Google on the Stock Market.

    November 15, 2010 at 6:17 am |
  5. seylan

    BREAKING NEWS: "Google search Logs show previous searches!"

    November 15, 2010 at 10:02 am |
  6. Jim

    Stock market price also corresponds to how much a company is mentioned in the news, or even more revealing, how much a company earns. Surprise!!!!

    November 15, 2010 at 10:03 am |
  7. Mbaka

    Good article but not necessarily news

    November 15, 2010 at 10:34 am |
  8. Garth Le Roux

    Hi, can someone please make available the scientific journal that this was published in, am thinking that there are serous flwes with this study and shouldn't even be displayed on cnn,, is Google paying cnn for all the free advertisement thay get from this garbage?

    November 15, 2010 at 12:21 pm |
  9. Librarian

    Original article:
    http://rsta.royalsocietypublishing.org/content/368/1933/5707

    November 15, 2010 at 1:08 pm |
  10. az

    I discovered that internet is big

    November 15, 2010 at 1:48 pm |
  11. Forrest

    Can anyone tell me why physicists, not economists or data statisticians, would release such a study?

    "...physicists in Germany and the U.S. have released a study..."

    November 15, 2010 at 2:00 pm |
  12. Cody

    All the authors are saying is that there exists a significant statistical correlation between the fluctuation of company searches and their corresponding stock value; a fact that has not previously been studied or documented. It's interesting.

    November 15, 2010 at 2:30 pm |
  13. josreinhoudt

    Dutch scientist Johan Bollen actually predicts stock prices analyzing twitter:
    http://www.huffingtonpost.com/2010/10/18/post_556_n_766591.html

    November 15, 2010 at 10:52 pm |
  14. Vince

    BREAKING NEWS: Headline jumps to conclusion not supported by article!

    Nothing in the article suggests anything about prediction.

    (Comments are moderated by CNN, in accordance with the CNN Comment Policy, and may not appear on this blog until they have been reviewed and deemed appropriate for posting. However, articles are not.)

    November 16, 2010 at 1:15 am |
  15. Davide Aufieri

    I m sorry but this is just bs... there is something called random walk theory that we are all familiar with i assume.. stocks cannot be predicted.... google trends might give a past look at what possible investors and not might have been researching most... thta does not mean it can predict any sort of success in the short or long run.

    kind regards

    November 16, 2010 at 1:29 am |
  16. Robert

    I've been thinking that just watching the price of the iPhone 4 drop by $3 a day since it's "shortage" was announced over. Kind of like Japan in the 80's when everyones waiting for the price to come down, how low can it go?

    November 16, 2010 at 3:28 am |
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    http://tinyurl.com/2u3ms4k

    November 16, 2010 at 7:53 am |
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