Most of us when we think of waffles would not think of the stock market. They’ve been around for a very long time, and if you want one it’s usually just as easy to get them by either heading to the frozen food aisle of the local grocery store or your favorite breakfast joint.
And yet…indeed, of all things, waffles led me to uncovering some really interesting stock charts today that I never would have found through stock screeners or any other type of stock search tool.
My research method is not conventional by any means. I cannot guarantee this might work for you – I do not provide financial advice and always stress when I write – NEVER invest anything you can’t afford to lose. Remember, there are a LOT of variables in how well any given stock may perform – including your own ability to create a plan and stay emotionally calm as a stock trader.
With that being said…I think using this method for finding stock picks is something that not many people do – and if they do practice this technique then it’s likely they don’t talk about it. Even if this method is completely useless to you – chances are it’s going to get you thinking of different ways to discover good stock picks.
My Waffle Stock Picking Strategy
We’ve mentioned this before – one of the weird ways to find interesting stocks is to just think of things you use or activities you enjoy.
Now waffles aren’t particularly something I use often or even think about. But the other day I was shopping on one of my favorite websites and it suggested that I look at waffle makers – they were on sale.
And that got me thinking…hmmm…waffle makers…wonder if there’s a reason they are on sale.
So I did some fun little research using free online tools that most traders don’t even know exist!
My Secret Stock Strategy Online Tool
Did you know, you can find what the world is searching for using Google Trends? You can see what’s really popular at the moment – or even view trends based on industry, niche, or other words and phrases. Think that might be useful for uncovering some interesting stocks you may have previously overlooked or not even knew existed? Heck yeah it could!
So…you can find Google Trends here: Google Trends Website.
You can look at hot trends for the day, or even type in a company name or product or industry and then look at how popular it is over time. They give you a nice chart of popularity/interest – which if you follow technical indicators or candlestick chart patterns – you can spot some interesting patterns right away.
I typed in “Waffle Maker” to see how it’s been performing.
Here’s my Graph for Waffle Makers:
Wouldn’t it be nice if all stock charts followed such a clear and consistent pattern like this?
Anyways, you can also see some other interesting things, like what regions the search phrases are popular in:
Knowing the regional interest of a product/service is useful because you can then think of external location based factors such as weather, news headlines, economics, politics, laws and regulations, and any other factors which could contribute to how a stock performs. This is great info to help you brainstorm for potential stock picks if you were to research a different industry to see what is particularly popular in a certain region of the country or even the entire world.
Keep scrolling down the Google Trends Page and there’s another really good box – Related Searches.
Now let’s find out more about the company Cuisanart that Google Trends has uncovered in the box above.
Cuisanart – This is a brand owned by Conair Corporation – currently not on any major stock markets, it is sold as a Penny Stock on the OTC market. Interesting. As a general rule I don’t touch OTC penny stocks…but for those who do check out this chart:
The stock chart is similar to the Google Trend chart. It looks strong. I should point out any company that’s been in business since 1959 and is only going for 47 cents a share on an OTC market is probably not the way I would want to go. The risk seems to high right now for my stlye. However, the point is not this specific ticker. The point is that you can search for stock companies that are trending or search for products or services that are trending and use the information as another stock forecasting tool for your arsenal. Just do your own due diligence and make sure that the market cap, the financials, the management, the technical indicators, etc. are right for you.
Moving right along the related searches list, the next word I see is “Mickey” – and I can only presume this means the famous mouse character we all are familiar with and our kids love.
So I decided to look up Disney.
Here is their 5 year chart as of February 5th 2016:
The stock chart looks strong long term but a little scary lately so I decided to cross reference it with Google trends. Here is how Disney has been trending.
OK. Not much to see here. Let’s try something more specific. Let’s think where the real money is in Disney. How about Disney Movies?
Now this is more like it. The increase in interest in Disney movies may have some impact on the share price. However, the recent drop in all 3 charts has me concerned. What do you think?
This made me wonder. How about the theme park. Let’s take a look.
That does not look good. This makes me wonder even more…are people traveling less? Let’s see…
Tourism looks to be descending. So, out of curiosity, let’s see how a stock related to the travel industry has been doing. How about the stock TRIP?
Here’s the 2 month candlestick chart for TRIP:
Lately, it has been dropping as well. Is this a coincidence or is there something to these similarities? That’s for you to decide.
Here’s some interesting things I noticed about these stocks:
- Waffle makers are pretty popular, though they may be a seasonal trend (do you make waffles more in the winter or the summer? Their Google Trends chart shows definite seasonal movement) – also, based on the trends chart, do you think demand is going to continue to rise, or do you think this is the peak of the life for waffle machines?
- Trends do not always go the way common sense would dictate. That why it is important to look them up.
- Perhaps we can use Google Trends as an additional tool to help forecast stock prices. I’m not going to say the trends guarantee anything but they can be a useful part of the research process that is often overlooked when it comes to researching stocks.
- Google Trends would best be used in combination with more traditional stock forecasting methods such as technical analysis and candlestick chart analysis to predict price movement. If the movement is trending down using all 3 methods then maybe it’s time to short sell the stock. If it’s trending up then maybe it’s time to buy. Nobody knows for sure but it sure helps having additional tools like Google Trends to research information!
Does Using the Google Trends Method of Finding Potential Stock Picks Actually Work?
Does this method work? Naturally, this answer is not one-size fits all – your results WILL vary on a lot of different variables. None of us ever really know what’s going to happen in the stock market. So, before going all in on something, I would recommend that you take some time to test this out using the Backtesting strategies we talked about before. Backtesting is a great way to see if your strategy would have worked in the past and whether it could be reliable to use in the future.
You also want to consider what industry you’re looking at – you’re going to discover different things on Google Trends if you search different industries. Take a look at real estate, or biotech companies, or health categories or whatever industries you think are going to help you get the results you want to achieve and see where those are going.
What Are Your Thoughts?
Have any questions about using Google Trends? If you use this strategy to discover some decent stock picks, tell us about it! Either tweet @trade_locker or join our stock forum community. We’d love to hear what stocks you’ve researched using this method – you can also comment below!