Each day, the financial news channels tell us why the markets were up, or why they were down.
But do they really know why?
Can it be summed up so nicely in a simple soundbite?
Let's think about it for a second: Every day there are millions of different people making decisions based on their own value scales. Some are thinking about the next decade. Others are concerned about the next week or month...Then you have the daytraders who only care about the next 30 minutes....or 30 seconds!
The *reasons* are way too complex for the mind to comprehend: One person may buy because he likes the P/L statements...another because he likes the charts. The sellers are thinking the exact opposite. Some people don't even make their own decisions; instead they use automated systems, or a financial advisor. It's also important to point out that at any second, every person can change his/her mind.
Can a soundbite capture all of this?
Does the financial news factor in all time frames? Or do they only talk about today?
The soundbites often resemble the following:
- Stocks were up today because oil was down.
- Stocks were down because traders were on vacation.
- The Fed moved the markets higher.
- XYZ dropped because of disappointing earnings.
I believe it's impossible to pinpoint so precisely...especially since for every buyer there is a seller who thinks the opposite.
It is true that the financial news channels know what their viewers expect. It's only logical to supply what is demanded.
But for those who want to go below the superficial surface...I recommend turning off the tube and thinking for yourself.
Sep 03 2008, 07:21 AM