When the News is Either All Good or All Bad
Recent market volatility, with daily multi-hundred point moves for the Dow Jones Industrial Averages, may be attributable to investors focusing, less on what the news actually means, but rather, interpreting every news item, on a given day, as either all good or all bad.
Obviously, the outlook for individual companies or the general economy, does not change measurably every other day. However, it seems that on some days, the markets take a “the glass is half empty” position on every news item, while on the next day, no matter what is actually reported, every announcement is viewed as, “the glass is half full”.
Investors would be well advised to continue to look at the longer term and not respond to every short term head fake.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA