A recent headline in a major newspaper said, “Stocks Close Higher After First Republic Rescue.” One day later, the paper ran a headline that said, “Stocks Fall on Bank Jitters Despite First Republic Rescue.”
The following week, the same paper ran a headline that said, “Stocks Rise After Fed Decision.” But a headline the following day said, “Stocks Fall After Fed Decision.” All four headlines are examples of how journalists and financial experts often cavalierly credit news for causing shifts in the stock market.
“Almost every day brings another example of rationalization in defense of the idea that news moves markets,” said Robert Prechter in the June 2004 issue of The Elliott Wave Theorist. But Prechter noted that people buy and sell stocks because the “social moods in which they participate impel them to buy and sell.”
“When news seems to coincide sensibly with market movements, it’s just coincidence, yet people naturally presume a causal relationship,” Prechter said. To learn more about social mood’s influence on everything from markets to war, sign up for a Socionomics Membership.
If you look closely, you can see patterns in social mood that help you predict social trends. Learn more with the Socionomics Premier Membership.