How Google is Poised to Become a Dominant Investment Manager

Google has wet its feet in all sorts of different types of companies, but asset management may be a new one for them. Although this is a tough business to enter into with all of the hedge funds and investment banks out there, Google is different because of their technology. They can use if, then algorithms and satellite technology to better understand and predict macroeconomic events that are happening each day. Also they can use these satellites to reveal company trends and this will help them make investment strategies for their customers.

            An example of this investment strategy is Google Trends. Google Trends collects popular search words or phrases and this can predict unemployment ahead of when the data is released weekly. Other information can also be figured out using this method and this will help their clients make money. Some of the biggest hedge funds in the United States use this approach as well, so it is not a new thing, but it is a successful tool to have as an asset management company. With the amount of technology that Google has, the company can go even further than the hedge funds.

            Along with Google Trends as an investment strategy, satellite imagery can also be an important tool. Neil Currie, a stock analyst who works for UBS, used satellite imagery to predict sales figures for Walmart. He took pictures of the parking lots at different Walmarts with the satellites so he was able to see how many people were entering and leaving the stores. This is a brilliant idea and Google recently purchased the company SkyBox Imaging. They specialize in producing HD imagery and made the first HD video of Earth from space (https://www.youtube.com/watch?v=fCrB1t8MncY#t=45 Here is the link to the video, it is pretty interesting). With this satellite imaging, Google can get many different company’s data to determine forecast sales, like Neil Currie, and other things important to a business, too.

            Although this all seems like the best thing to ever happen to people who want to manage their money better, there are some drawbacks. For example, although all of this technology information sounds like a great idea, people need to trust their financial advisors because money is very important to them. They would rather go with companies that have been around for a while and have a reputation for success. This is probably what the older generations will want, but the younger generations are all about technology and would rather have those technological tools manage their money than asset manager’s old school techniques. A technological takeover is inevitable, but if the hedge funds adopt Google techniques than they will stay as the top dogs in the asset management business.

            Google is also into venture capital, called Google Ventures, which has invested into 189 companies. Some of these companies are financial companies and Google started its own trading floor to manage its cash better. With these tools and financial background already in place, Google is on its way to becoming a successful asset management firm.

http://www.forbes.com/sites/jonhartley/2014/10/06/how-google-is-poised-to-become-a-dominant-investment-manager/