Search Trends & The Stock Market

Here is a different type of Google search tool that combines business insights with search data. It is geared toward stock investors but there is probably insight for us too.  It shows how different verticals trend relative to the S&P500. What verticals do you think would correspond closest to search traffic?

s&p500 and google search

Here is an interesting graph using Google’s financial tools and search query results. The blue line shows searches for phrases like “financial planning advisers”, “fidelity” “smith barney”. The red line shows the trend line of the S&P 500. Note how clearly they correspond to each other! As the S&P500 does well fewer people look for a financial planner.  This seems to be the most closely corresponding vertical.* But negatively.Why?

Imagine a middle class person has a little extra cash and wants to invest it. If the S&P500 is doing well, they can just buy a couple companies they recognize and watch their worth increase. In more difficult financial times people start to look for financial help. I would guess the correlation coefficient is -.8: Strong negative correlation.

You can do this for any vertical you are in or thinking about getting in. So we saw that financial advisers has a strong positive correlation. What vertical do you think has a positive correlation? My guess was luxury but I was wrong. Here’s luxury:

searches and stock market correlation


If I had to guess a correlation coefficient for luxury it would probably be .35. Small correlation but nothing I’d bet the house on. So what has the best correlation? It’s Automotive! I would guess the correlation coefficient as .55: Medium positive correlation.

automotive and search stock

Durable goods and house buying are about the same. So people perform fewer searches in these verticals as the stock market fluctuates. How can you use this to your advantage? Well, if you are a financial adviser I suppose you should be rooting for the S&P500 to go down. :( Or if you are a financial adviser and you suspect the stock market to go down you can start increasing hiring advisers.  Or for my readers who are search marketing consultants- if/when the stock market goes down expect belt-tightening from your car and housing clients but seek out financial advisers!**



*Google doesn’t mention which search terms it uses to define a vertical. It just gives examples. I’ll assume they put a little thought into this. It also does not mention every vertical. For example, I don’t see aerospace.

Also, google does not provide exact numbers so we can’t find true correlation we can only use “eye-ball analysis”. I think that is fine.

** One other thing to note that while I implied a cause and effect relationship—or a causal relationship of some sort—I think it is stock prices that are doing the causing not vice versa. I have made this assumption in all commentary.