Get Your hedge, Predict the market: “Happy” Data Mining

Fund managers are finely attuned to monitoring all aspects of the economy, and this includes consumer sentiment. Because consumer sentiment has been relatively low for many years, fund managers could not help but take note when Pharrell Williams’ upbeat hit “Happy” hit the top spot in music charts in the United Kingdom earlier this year. This song is the only song to achieve this milestone in the United Kingdom in almost six decades.

While monitoring music charts is not something that fund managers normally do, this particular song reflects the overall outlook of consumers in the United Kingdom and in other areas of the world where this song is also very popular. Of course, this particularly upbeat and overwhelmingly jovial song is not the only indicator that consumers are feeling more positive in their outlook on life in general. Consider the fact that the most popular color of cars being purchased during the economic crisis was black, a rather somber, serious hue. Currently, more consumers are choosing brighter colors, including the ever-happy yellow hue. Monitoring consumer behavior in this fashion is an increasingly popular way for fund managers to mine data.

While some fund managers are using the tracking of car color preferences and song selections to determine consumer sentiment, there are other steps that some managers are using to mine data. For example, some managers are using the Internet to review search engine trends and to pay attention to trends in social media messages, such as Twitter feeds. These trends can indicate whether investments will be placed in retail, entertainment and travel stocks or to purchase stocks that are a mainstay of the economy.

Some fund managers continue to choose stocks based on analysis of economic data, but more fund managers are relying on new methods to mine data and to make their investment decisions. There may still be some need to crunch numbers and to review mathematically complicated algorithms to make investment decisions. However, because of the new methods of data collection that are available to fund managers and because the new methods provide fund managers with significantly more timely information, this is becoming an increasingly popular option for managers to rely on.

In fact, some financial experts have stated that Google has access to so much consumer data through its search engine functions that it could easily sell data from its database or could even open an asset management firm to put the information to better use. Regardless of what Google does, many investment firms are using consumer behavior and trends to make better decisions for their clients.


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