Bouncing Around Is What Markets Do

Chao Deng in the Columbia Journalism Review:

“The idea that all of a sudden people got the idea that Bernanke was going to do something, to me, is just kind of crazy,” Miller said later when I reached him on the phone. “There is too much meaning inferred from what is normal volatility or variation.”

A better explanation for the Tuesday rally was that the huge stock sell-off in early August had set up markets for a relief bounce. After seeing a bit of upside, some investors got antsy enough to want to jump back into equities. And when stocks ran up so sharply at midweek, some decided to take profits, as the saying goes, and get out.

In the end, bouncing around is just what markets do, isn’t it? That’s why I don’t blame sources when they decline to talk about intraday movements. I’ve encountered a handful of long-term portfolio managers who scoff at the very idea of reporting on daily market movements. The strategists who do talk do the best they can. Sometimes, if no macro explanation presents itself, they resort to talking about individual stocks or sectors.

100% correct.

Posted by on October 4th, 2011 at 12:49 pm


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