As another example of the stock market showing that most news is garbage, there’s a story I’ve told before from when I was working in finance. News reporters saw stock prices in retail drop in mid-2007, led by one particular large company, and they built a story around why. “Retail expectations,” and similar post-hoc explanations led the headlines in all the financial outlets.
Having seen exactly what happened, I can confidently say that the actual story was that a large hedge fund’s options desk rolled the expiry of their long-dated call position (from 2008 to 2009, IIRC,) and when all the counterparties rebalanced their delta hedges, it pushed prices down, which was then taken as a signal about other retailers, whos prices also dropped a bit. If you looked at the volumes and prices over the 10-minutes after we got the call asking to change the position, and the next ~2 hours for other retailers, it was really clear.
As another example of the stock market showing that most news is garbage, there’s a story I’ve told before from when I was working in finance. News reporters saw stock prices in retail drop in mid-2007, led by one particular large company, and they built a story around why. “Retail expectations,” and similar post-hoc explanations led the headlines in all the financial outlets.
Having seen exactly what happened, I can confidently say that the actual story was that a large hedge fund’s options desk rolled the expiry of their long-dated call position (from 2008 to 2009, IIRC,) and when all the counterparties rebalanced their delta hedges, it pushed prices down, which was then taken as a signal about other retailers, whos prices also dropped a bit. If you looked at the volumes and prices over the 10-minutes after we got the call asking to change the position, and the next ~2 hours for other retailers, it was really clear.