How important do you really think business news and reports are when investing in stocks?

Question

Does it seem like just a game. Some times news is bad but good and good is bad for stocks. If your short selling anyway, which most are, does it really matter things like "business news?" Do you think this is just part of the deception in which way a stock is going to move?

Answer 1

Smart investors don't trade based on news reports. The only time you should execute a trade, long or short, based on a news report is when the news changes your fundamental view of management, the business cycle, or of the long term prospects of the company. I'm not suggesting a buy and hold forever strategy, but if you trade based on every news report, you will go broke in a hurry.

Answer 2

I've been frustrated by that too. By the time the news gets out, the market has already known and moved, then moved on to other issues.

As for deception, when the email comes in (the one I laugh the loudest at is, "we have a runner!", yeah, right) to tell you about some penny stock poised to soar--usually with some subject line about aunt martha is sick or something stupid. That is deception. When the WSJ or BusinessWeek or CNN/Money or the local paper gives news about a company, and it seems to come AFTER the market has made its move, that isn't deception. Deception is thinking that because there is news about a stock the stock will automatically rise, so get over it.

Still, there are times when the news is far-ranging and you are then into something that while it may have started already, it is the cause for a bigger trend. You have to pick the news, how the market has or hasn't reacted and go from there. To buy every stock of every company that makes the news is to go broke pretty soon. It is a little more complicated than that.

Answer 3

that is one thing that makes investing very hard. the financial info from companies is very important and watched very closely. the quarterly earnings reports are super important. not only are those reports important, but the comments the companies make when they release those numbers are also very important.

for example, a company may come out with an earnings report that is a little higher than expected, which you would think is very good news, but they may also add comments that they see the demand for their business decreasing over the next few months or year, which of course is very bad news, and the stock price will probably go down just because of this, even when they had good financial numbers. everything impacts the price of stocks, events all over the world have a big impact, that is what makes it so hard....if it was easy everyone would be rich.

Answer 4

Mr. Market can act very strange to news.

Sometimes you'll see a stock tumble for the most ridiculous reasons. For example, I've seen things as absurd as all analyst estimates getting beat, but because guidance was not raised the stock takes a fall.

I've also seen an 8-k filing release where it stated that management feels the stock is undervalued. The stock did not move for a month. However, it went on to more than double in the following two months.

I've encountered enough instances where I disprove the efficient markets hypothesis. Maybe that's why the school of value investing is still alive :)

Answer 5

By all means read the news/ magazines/ and the share-checks, but most of all trust your own judgement, never do anything that you don`t feel right about, never use money that you can`t afford to loose.

Answer 6

In 1929 I sold short- Phew.

Answer 7

Not very- the market will often have priced in the effects. More important are ensuring good fundamentals and checking your charts.

Answer 8

if ur spread betting momentum can b enough