Should Google compete with Goldman Sachs?

By: ispeculatornew
Date posted: 09.09.2009 (5:00 am) | Write a Comment  (0 Comments)

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google-domination-250x300Should Google start trading stocks to gain additional cash flows? Probably not no. But it certainly could. Think about it for just a few minutes. Who knows more about what customers are looking for than Google? If customers are searching 20% more for a new Toyota model while they are looking 20% less for the new Ford launch, does this mean that Ford is not selling as many cars? Probably not. But as data gets more and more reliable and comes in with increasing quantity and quality, chances are that Google will soon be in a good position to know what customers are currently buying and what it isn’t.

There are so many ways to use the data, it almost makes us dizzy really. But the truth is that there is little doubt; this type of data does have value; lots of it.

Google and its priceless data

Up until now, Google has seemed more interested in just giving us previews of what could be done with the data, than actually using it. But a new addition to its finance portal; Google Domestic Trends, promises to go down the path of using this data. Google seems to have decided for the moment to simply give the info away rather than using it or selling it. Of course, that is no surprise from Google and it is true that up to now, the data available is very general and is not easy to use. Or is it? Take a look at this data compiled by TechCrunch that links the actual retail sales with those predicted by the Google Retail Index. Very impressive and this could certainly become a very valuable source of information, especially for trading purposes.

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Trading, really?

Why? Because while trading is already done on indicators such as Retail Sales, the data is usually released weeks and even months after the facts by government agencies. The data from Google however, could be available almost in real time. And in a world where information is the key resource, that has a lot of value. The graph below is the Google Auto Financing Index. Depending on how accurate it is, you would think that auto sales would be coming down quite a bit (logical following the end of the Cash for Clunkers), and it is certainly information that could be traded on.

Should Goldman be worried then?

Of course, right now, there will be no  one at Goldman or elsewhere that will lose sleep over this. But give it a few months/years and those who have the right type of access to Google data might become a major force to be reckoned with…

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