Using Google Trends to track the madness of crowds
The internet search for “Bitcoin” has exploded. This can only mean one thing. The price of Bitcoin has went vertical. According to a MarketWatch, there is an 80.8% correlation ratio between bitcoin prices and internet searches for that fake currency. The only way for this bubble to grow once again is for new money to pile in. It’s coming in by the truckload. The price has went from $5k back up to over $12k in a few short months. The price of Bitcoin is impossible to predict. As I wrote last year on this topic, I concluded that it’s going to $100k or dropping back to $2k. Bitcoin is highly manipulated and world governments are way behind the curve in regulating it. I’m certain that a number of players can buy and sell before anyone else knows what comes next.
We can see a glimpse of these trends using a search tool from Google called Google Trends. The search which shows the interest over Bitcoin can be found by clicking here.
In 1841, Charles Mackay published Extraordinary Popular Delusions and the Madness of Crowds, which was an early study of crowd psychology. He wrote, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” I’m certain that Charles Mackay would have loved Google Trends. You can track the madness of crowds in real-time!
I searched on the term “pot stocks” and it tracked the move in those stock prices as well as it did for Bitcoin. As the search actively for “pot stocks” fell, so did the price for most pot stocks. In September 2018, I wrote about the craze in pot stocks at the height of that bubble. There was a marijuana stock that week that went on a rollercoaster from around $115, touching $300 in a few days, only to finish the week at $123. It’s now at $46. These pot stocks are in desperate need of more interest searches. Those crowds will likely return, but like Bitcoin, it’s impossible to predict the madness of crowds.
Google Trends is just a glimpse of how data is feeding computers to move markets. If you are interested in the upcoming 2020 election, this Google trend tool can help you track your favorite politician. President Trump had a nice bump early in his campaign back in 2016. The interest in his search has been very consistent for the last 12 months. The internet search for “Joe Biden” has fallen recently while “Elizabeth Warren” is on the rise. There is an art to playing the madness of crowds using Social Media and President Trump is one of the best. I’d say that the Kardashian clan is #1.
Capturing trends and data mining has become one of the fastest growing industries. The 4th Industrial Revolution is mining for data and how artificial intelligence (AI) is using this information to improve efficiency and productivity. I’m sure that I’ll be writing about these trends in the future and how they impact your investments.
I will be out of town next weekend at a family wedding and my next post will be July 15th. Have a Happy 4th!
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