Have you heard of Google Domestic Trends?  It’s a pretty cool tool offered by the Google Finance team.  The Google Domestic Trends tracks Google search results relating to specific sectors of the economy.  It’s currently only focused on the US market, however since they still remain Canada’s largest trading partner, it is still very useful for investing in the Canadian marketplace.

A Leading Indicator?
Because many consumers use Google to begin their research of major purchases, it is uniquely positioned to leverage that search information to see what trends are developing before people are actually making purchases.  A really interesting chart presented is the one for the Auto Buyers Index.  Since 2004 there seemed to be a natural trend of late summer interest in cars, however in 2009 with the Cash for Clunkers program, the index surged to record highs.  But by looking at the charts there didn’t appear to be an appreciable correlation between specific companies, like Toyota, Ford or Honda.  This certainly wouldn’t write off the data as irrelevant considering the many other factors at work during this special economic time.

Google Domestic Trends can be useful for the long term investor.  The short term trader may not find the information timely enough to profit from.  The industry moves based on the information given to them, so unless professional money managers begin to move on Google’s data, then this tool won’t be as much of a leading indicator as it might seem.

Can You Profit From This?
Personally, I don’t see this tool will help anyone get rich quick, however that’s not what it’s about.  It may be helpful for retail investors to gather new information and macro trends in the US economy and to begin their research into one of the specific industries.  From there, further research can be conducted to pick the profitable companies.

If you have a whole market approach, through index funds, or mutual funds, then the Google Domestic Trends may be a valid part of your investing based on economic indicators.

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