Markets Don’t Care About News

Ben Carlson, Director of Institutional Asset Management at RWM, wrote a wonderfully thoughtful analysis about one of our favorite subjects: Why Stock Markets Don’t Care About the News.

It is your must read today.

Its this simple: News is old. Except for true surprises, its already in price by the time it hits the press.

Ben breaks down issues of news consumption into 5 problematic categories:

1. Markets don’t care who the president is.
2. Expectations matter more than the news itself.
3. The flow of information is mind-boggling.
4. We are pattern seeking creatures.
5. The economy is still humming along.

Note that the first four are always true; only the economic discussion is specific to today.

I love the chart (via BofA Merrill Lynch) showing a breakdown of scary headlines — despite this, we  are back at all-time highs yet again.

Source: BofA Merrill Lynch via Wealth of Common Sense



See also:
Lose the News (June 16, 2005)

News, Media and Investing


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