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Google Trends has been in existence for a number of years albeit under different names. The platform is mostly used by Internet marketers to isolate keywords to focus websites around in an attempt to boost website traffic. The more popular a keyword, the greater the cost to have your website/blog listed as the first result when someone searches that particular keyword.
As long as you have an Internet connection and access to Google, you can access Google Trends for free and find out search volume trends for almost any keyword/search phrase (given that the number of searches are significant enough).
If Google had it’s own hedge fund, I would imagine it to be one of the more successful funds in play. Imagine having real time statistics on Internet search trends at your fingertips, you would have been able to detect trends in 3D Printers long before the herd of portfolio managers, advisors, and analyst ever caught wind of the industry. Imagine knowing the exact moment in time when searches for 3D printers increased from next to nothing to say 1 million, 2 million or 10 million searches a day.
A very successful and popular portfolio manager by the name of Peter Lynch utilized the same concept, of using trends and “local knowledge” which is essentially being aware of the products and services you or others around you use on a regular basis. At a high level, his investment strategy suggested the companies that produce the products and services that you or those around you use on a regular basis or that are increasing in popularity could be a good investment given that the underlying fundamentals hit all his high water marks. To give you an idea of the success he had with this strategy, Lynch averaged 29.2% annually and holds the record for the best 20-year return of any mutual fund EVER!
With Google Trends, you could literally never leave the comfort of your home and have an infinite amount of current trend data equal and in some cases better than what was used by Lynch during his time. Google search data gave multiple hints before and during massive appreciations in share price in companies such as Apple, Tesla, Stratasys, Amazon, and many more. On the same note, Google Trends can also inform you when a particular keyword is falling out of favor. When searches for a particular keyword begins to fall, this would suggest it is falling out of the public’s favour and would bode negatively for the company’s future prospects, especially if it is web based in nature. For instance, search the term “Facebook” and you’ll see an exponential increase in searches since 2004 but over the past year, searches have seen a very alarming depreciation in searches that coincides with a statement by the CFO that engagement among teens is in decline. Now if you’re a long-term investor that is thinking about taking a position in Facebook, this is one trend that you would want to know and think about before committing your hard earned dollars.
Google Search Trends are NOT a replacement for fundamental or technical stock analysis as they are still very important methodologies used in stock selection. On the contrary, Google Search Trends can be used in conjunction with both fundamental and technical analysis and frankly, as the world becomes more and more intertwined with the internet, I would dare to say that any analysis of a company should include a review of search trends whether the company in question is web based or not.
This is where Trendvesting.wordpress.com seeks to arm readers with the same foresight that Peter Lynch had by identify relationships between companies and related google search trends with the goal of identifying companies that are primed for price appreciation. Trendvesting focuses on providing insight into macro economic indicators, and company search trends. Subscribe to Trendvesting today for the latest in Google search trend analysis and the latest stock picks!