And the market is up... why?

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David Post over at Volokh Conspiracy complains about something that's bugged me for years:
Pretty much every day, in pretty much every newspaper in the country, there is a story that goes something like this [taken from todays WSJ]: "Yesterday, the Dow Jones industrials fell xxx points to yyyy on new concerns about interest rates and anxiety over North Korea's missile tests." Or the Dow rose, due to "increasing optimism about prospects for peace in the Mideast." Or whatever. It's complete and utter nonsense. The market did in fact fall yesterday. But how could anyone possibly know that it was due to "concerns about interest rates," or "anxiety about North Korea's missile program"?

Quite true.

The other thing that really annoys me is that frequently the size of the movement is tiny. If the Dow is up 30 points (.3%) that's well withing the range of random variation. It doesn't need any explanation at all. I guess if the announcers said "the markets didn't really do anything today at all and we wouldn't understand it if they did" people might not be as interested in tuning in.

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From what I understand, sports broadcasts in many other countries lack the blathering, mindless running commentary that we are subjected to here. Wouldn't it be nice if the only information we were told was useful?

I think a parallel runs with most media here; the mindless drones tune everything out because 90% of it is useless chatter. Too bad the result is that when something significant comes along, it is largely ignored.

Fear of silence is powerful.

Sometimes they say "the market fell 100 points amid rumors of impending layoffs at ..." This strikes me as the least offensive way to speculate about what was on the mind of traders, since it doesn't assert causation. As long as the news people do their homework and correctly report the event (rumor, whatever) and verify that it is in fact widely discussed, saying that the market moves amid talk of such events is technically correct and may help explain the change.

It has always seemed silly to me that market information is always reported only one day at a time consumer news. What use is that? I want them to take 5 extra seconds or 0.5 inch more column to add something like "that makes it down www for the past month, up yyyy for the past quarter, and up zzzz for the past year."

My favorite explanations by analysts are "profit taking" when a stock price they just know should be rising actually falls, and "short covering" in the opposite case.

So, would you get any less glib and plausible-sounding explanations of why things had happened from an astrologer? These expanations are ways to fill the airtime, not useful descriptions of reality. If those guys knew that such and so announcement yesterday would lead to an 11% fall in IBM's price today, they'd be far too rich to need to show up at the office and do a stock market report every day.

If profit-taking is an explanation for stock prices falling, then clearly, when stock prices are rising, it's a result of loss-taking.

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