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The unexpected "indicator" that caught the October 2008 and March 2020 major market bottoms
Posted: Mar 18, 2021 19:37
Source: Google Trends

This chart shows the total number of searches per month on the sensex (red) and nifty (blue) from 2006 and 2020. The two highest peaks (readings of 50 and 100) took place in October 2008 and March 2020, the very months in which the major bear markets of 2008 and 2020 bottomed out and resulted in immediate runaway upward moves.

These two events are too few and far between to be the basis of a regular investing strategy, but they do illustrate the power of quantitative behavioural finance, (one of the many subjects you can learn about in our Course & Anticourse),.

Essentially, people search for subjects that trouble or excite them, and at times of market extremes the number of searches also go up, resulting in peaks like those in the chart.

This is an exciting new area of research, with plenty of opportunities for creative and observant traders. There are also existing systems for those who do not want to think too hard!

Lastly, another point of interest from the chart - people search for the sensex more than they do the nifty, even though traders on social media talk only about the nifty (and banknifty).

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