On Tuesday (April 23), a tweet from a hacked Associated Press account claiming there had been explosions at the White House sent the Dow Jones Industrial Average plummeting 145 points almost instantaneously. The incident was an example of how quickly the Internet can send shock waves through the financial world, given how many trades are completed by computers rather than humans.
But new research finds the financial world doesn't just respond to the Internet; the Internet can also predict what the stock market will do. The research isn't the first to find such online clairvoyance. For example, Google may even be able to predict medication side effects before doctors can, thanks to people's tendencies to self-diagnose using the search engine. Google searches can also forecast the spread of the flu.
The new study, however, takes the extra step of testing out how well stock-buying would go, using Google search trends as guidance. The result: a pretty nice return.