On Monday, I wrote about using Google Trends as a resource for investing ideas. I took a look at three restaurant businesses which, while they were on my mind at the time, probably weren’t the best candidates for this kind of research.
Below, I’ll take a look at three Google Trends charts and compare them against some corresponding stock charts.
– Trends for “bull market” and “bear market” vs. the S&P 500.
– Trends for “bed“, “bath“, and “kitchen” vs. Bed Bath and Beyond (BBBY).
– Trends for “book” and “books” vs. Amazon.com, Inc. (AMZN).
Notice the period between April 2005 and October 2005. The number of searches for both “Bull Market” and “Bear Market” flattened out. At this time the S&P was having a 20 point run from ~170-190. Then we see a surge in “Bull Market” searches which corresponds pretty closely to the peak of that run.
Currently, it looks like the trend for “Bear Market” searches is shooting upward while the “Bull Market” searchers are evening out. A lack of “Bull Market” searches, just as there was a lack of “Bear Market” searches in 2005, could signal the end of the downturn.
Bed Bath and Beyond Analysis
What do these charts tell us? We see peaks leading into the holidays on both charts. BBBY (like a lot of retailers) tends to do well through the fall season. The biggest peak in “bed”, “bath”, and “kitchen” searches is mid summer (home remodeling? cook outs?). BBBY tends to have good Julys as well.
While the movements in these searches is smaller, there seems to be a pretty good correlation between the searches and BBBY’s stock.
Finally, we have Amazon and a chart showing searches for “book” and “books”. You might think this chart is the most telling of all since Amazon makes their money on the web. Let’s see what we get.
The first thing to notice is that these searches seem to be in a downtrend. However, there could be a turn around indicated this April, which is mirrored in the previous two years. Amazon has also been in a bit of a downtrend, with a big crash this summer. So while the stock is plummeting, there is a resurgence in book searches online. Hmm, could be a buying opportunity.