How much do you think the news media influences the stock market?

Question

how so?

Do you think that it is important in investing to keep up with what "the herd" has heard? And how this will supposedly be "bad" or "good"?

Is that what CNBC is for?

Answer 1

Because the general public believe everything they hear on TV - and then rush out to buy stocks/sell stocks. The media is probably the biggest influence because it gets in fron of the largest audience.

Answer 2

News reports about the stock market exist for one simple reason, to give the illusion of bridging the information gap.

I'm not talking about blatant insider trading, but the fact that there are people in the stock markets, whether they are rich individuals or institutional investors, who have access to information way before it leaks out, and way before it appears on TV.

Therefore the true movements of the stock markets are started before the news appears on say CNBC.

Obviously, in cases of say FOMC/BoE/BoJ meetings on interest rates, all investors are on relatively equal footing regarding the actual news, but the leaks that anticipate the movement and that allow investors to take a position anticipating the news still go to the well connected investors first.

The role of the media can thus be three-fold.

One is to spread the news so that the 'herd' pushes the market in the 'right' direction and allows the well-informed investors to cut the largest profits since they entered the move way before most of the 'herd'.

A second role is to spread rumours so as the well-informed investors can get out of a bind. Misinformation is rife, and even if the media acts in good faith, there have been and will always be pieces of information reported that is designed to send the market in the 'wrong' direction as far as the herd is concerned, but which allows the well-informed investors to get out of their losing positions.

The third role of the media is connected to the second. It is to explain, after the event, what happened, give some rationalisation such the the 'herd' doesn;t lose faith in the stock markets and continues fulfilling its function.

As a final note, the internet, while giving the illusion to som eof more transparency, is not much better than say CNBC in these matters, on the contrary, it is so much easier to spread misinformation via the net.

Answer 3

I don't think the media influence the stock market very much. People who are going to be swayed by TV news to buy/sell don't have the big dollars that institutional investors have, and thus won't have much effect.
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Answer 4

no by the time the media has the news the stock price has already reacted as the price has been influenced by the anticipation of the event not the actual event