News from the Financial Times today says that Google’s chief economist is working on using real time web data to create Google’s own alternative version of the Consumer Price Index (CPI), the Google Price Index (GPI). Currently the CPI collects data by hand with a few weeks lag time built into the monthly report versus Google’s potential real time application. The GPI would also focus on a somewhat different basket of web sold goods, being less influenced than CPI by housing for example.
Google has reinvented a variety of industries including online search, advertising, applications and is targeting television, mobile, automotive technology and others. Now that Google is beginning to look at indexing in light of its technological abilities, one wonders what investment applications may emerge. Could Google investment indexes or active investment strategies be far behind? Google would likely be attracted to the ETF structure for the efficiency, transparency and flexibility it offers investors and the disruptive technology found in ETFs would seem to match the spirit of many of Google’s core offerings.
The ETF and indexing world has been rocked in recent years with an assault on the traditional market cap based index paradigm. Now Google, with perhaps more brain and computer power than any organization in the world, is attempting to redefine one of the most well known indexes in the world through the use of real time data. Could the notoriety and momentum of this effort translate to the asset management world? Absolutely! Imagine being a retail investor and harnessing Google to power your portfolio instead of being victimized by today’s top investment technology bullies: high frequency traders and hedge funds. Google, where art thou?
Keep an eye out for more info on GPI and don’t be surprised if Google’s technology begins to creep into an investment application someday soon.