Journalists & Markets

I love how the business news writers always have a reason for a stock market movement. They can't stand to admit that something happens for either no reason at all, or for a reason they might not know about. For example, I saw a headline that said the stock market recovered on Thursday because of hopes regarding the bailout. That makes no sense whatsoever. The bailout is 4 months old. It's not news and how could anyone hypothesize that its prospects led to a stock market recovery on a Thursday afternoon? They don't know why the market moves the way it does, so why do they always have to try and rationalize it?

Markets don't care about the past, they care about the future. A revision of the jobs report for December is not going to have the slightest impact on the market, yet that's what the business journalists use as a headline. Another example is when they use a single company to explain the entire movement of the global market. Like when "they" said that a poor earnings report from Chevron led to a market sell-off. I read that headline and went straight to the Chevron quote: it was down less than 1% while the rest of the market was down over 2%. There's an explanation for you!

Having no connection to Wall Street or its ridiculous journalists has its advantages. William O'Neil recognized this and made a fortune. Before him, Nicolas Darvas had a similar strategy. He wanted nothing to do with market news or rumors. He just wanted the quotes. You can learn a lot by refusing to listen to any advice or news and simply watching the price and volume action for a stock or an index. Never believe that a journalist's explanation for the way a market moves is accurate. A journalist is a journalist (and not a professional trader or investor) for a reason.