Are Tech Book Sales a Leading Economic Indicator?
by Madeline Schnapp
|
Pages: 1, 2, 3, 4
O'Reilly Book Sales Vs. the NASDAQ and Other Interesting Observations
In this study, I selected the NASDAQ as the bellwether stock index. In other recessions that were brought on by a weakening in other segments of the economy, such as manufacturing, the S&P 500 was an excellent bellwether of the resulting economic downturn. Our current economic downturn has been led by the collapse of the dot coms, the softening of demand for computer equipment, and the financial bloodbath in the telecommunications sector. The tech-heavy NASDAQ, therefore, has been an excellent leading indicator of the current economic downturn.
So what does all this have to do with predicting the future using O'Reilly's technical book sales at Amazon.com? Figure 1 is a graph of O'Reilly book sales at Amazon plotted against the NASDAQ from January 1999 through September 30, 2001. Note the similarity between the sales curve of O'Reilly books at Amazon.com and the NASDAQ over time on a macro level and, upon closer inspection, a micro level.
 |
Figure 1. O'Reilly Tech Books at Amazon mapped against the NASDAQ Stock Index. (Click for larger image) |
 |
Figure 2: The correlation of Sales of O'Reilly Linux Titles at Barnes and Noble with Red Hat Stock Price. (Click for larger image) |
Similarly, over the same time period, we saw correlations between Oracle stock price and the sales of Oracle Books at Barnes and Noble (Figure 3).
 |
Figure 3. The correlation of the sale of Oracle titles at Barnes and Noble to Oracle stock price is not as strong as the correlation seen in Figure 2, but the overall trend is in the right direction. (Click for larger image) |
The most striking correlation was the sale of Linux books with the price of Red Hat Stock. We think the sale of O'Reilly's Linux books was strongly affected by the David-and-Goliath tale that the press was telling about Red Hat and Microsoft, as well as the IPO frenzy surrounding Red Hat and VA Linux. If we compare the top 10 Linux titles just prior to the IPO with the top 10 titles a year later (Table 1), we find that the earlier list is heavily weighted towards introductory Linux titles and that the later list contains more technical titles. Prior to the Red Hat IPO, consumers and investors, afraid of being left in the dust, were snatching up Linux books in the hope that these books would explain Linux and offer insight on whether to invest in Linux companies. The Linux books available on the market at the time certainly answered the first question. The answer to the second question was left to the judgment of the savvy investor.
Table 1: Top Ten Linux Titles in November 1999 and November 2000. The 1999 list contains more introductory titles than the 2000 list.
Top Linux Books - November 1999
Top Linux Books - November 2000
- Building Linux Clusters
- Running Linux
- Linux in a Nutshell
- Maximum Linux Security
- Linux Firewalls
- Red Hat Linux 6 Unleashed
- Linux Administration
- Linux Device Drivers
- Linux Network Servers: 24 by 7
- Understanding the Linux Kernel
