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Finance guys, explain this to me!

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Finance guys, explain this to me! [#permalink] New post 08 Dec 2008, 18:01
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Every time the market goes up or down, the media seem to love to assign some reason for it.

Take the upswing today:

"NEW YORK – The stock market showed renewed confidence Monday, extending its rally and lifting the Dow Jones industrials to their highest level in a month following President-elect Barack Obama's promise to increase infrastructure spending to lift the economy."

I read another article that said the upswing was due to the fact that the Big 3 bailout looks like it will happen.

Is it just me or does the media just look for a reason after the fact?

RF
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Re: Finance guys, explain this to me! [#permalink] New post 08 Dec 2008, 18:39
I would not disagree with you there.
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Re: Finance guys, explain this to me! [#permalink] New post 08 Dec 2008, 18:45
refurb wrote:
Every time the market goes up or down, the media seem to love to assign some reason for it.

Take the upswing today:

"NEW YORK – The stock market showed renewed confidence Monday, extending its rally and lifting the Dow Jones industrials to their highest level in a month following President-elect Barack Obama's promise to increase infrastructure spending to lift the economy."

I read another article that said the upswing was due to the fact that the Big 3 bailout looks like it will happen.

Is it just me or does the media just look for a reason after the fact?

RF


Exactly my thoughts (kudos for bringing this up 8-)). I figure a good number of these articles are probably written by "generalist journalists" who're not very macroeconomics savvy..
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Re: Finance guys, explain this to me! [#permalink] New post 16 Dec 2008, 14:06
It is more that the typical reader and writer would like to assign reasoning behind a stock market move. The sentiment driving the market is somewhat more complicated and aligned to many things, but they prefer to give a form of explanation.

This probably comes from the fact that so many people have an interest in where the market is, probably in a passive manner, and due to their 401k. Saying the market moved up today without a conjecture as to why would leave the average investor highly nervous as to why this happened (especially now, at heightened observation as it has been seen to go down a lot and people are sensitive - historically ups did not need explained as much).

The familiarity with the gross over-simplification of what drives finance will be very apparent to anyone who has done a relatively quantitative job of any sort when asked to explain what they do. You make something up completely simple to stop them asking more questions.
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Re: Finance guys, explain this to me! [#permalink] New post 24 Dec 2008, 04:57
This type of news article are among many examples of "idiotic markets reporting" that is quite widespread. Every time there is a market move you hear a reason associated with it. "US stocks fall on weak housing data" - "Gold falls on demand concerns" - "Oil slides on weak economic news" - "Dollar weaker on softer gold" ... what the hell ? The journo usually has no idea about the real reasons.

3underscore hits the nail on head with his explanation as to WHY this type of reporting is widespread.
Re: Finance guys, explain this to me!   [#permalink] 24 Dec 2008, 04:57
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