- I’ll analyze a few scientific studies on how news impacts stock prices and also a couple of interesting case studies.
- There are some rules that can be applied to news and stocks.
- It’s interesting how Wall Street always weighs the short term much more heavily than the long term.
I’m sure you often see abrupt price moves with the stocks you follow or own. Those abrupt moves—which can go to 10% or even 20% in a day for a relatively stable business, 20% to 50% for a mining company, and even more than 50% for a pharmaceutical—are due to some kind of news coming from the company or related to the company that makes investors take action and sell or buy.
Today, we’re going to discuss how stocks usually react to news, the information asymmetry, the stock price drift, and how to take advantage of the sharp price moves. More →