In the past year, economics and related topics have been important news and media coverage. On average there are more than 40 million spectators every day, and television news covers a wide area. With such a key piece of information and such a large audience, it is not surprising that the media has an impact on the choice of investors in buying and selling stocks every day. This article presents some little-known facts, namely the media's influence on investors' decisions and what they can do.
Here are six examples of how news and media influence stock market investment.
1. Specific references: Specific references from news and media resources to company or stock codes have a significant impact on the investment activities associated with the stock. In addition, the reply is fast. Within a few minutes, if the media reference is positive, the stock price may start to rise, or if the media reference is negative, it may begin to fall.
2. Negative impact: Typically, specific referrals in the news media may affect the shares of other companies in the same sector or industry group that are related to the recommended stock. Unfortunately, sometimes the recommendation results will lead to inappropriate results. For example, a negative news reference to stock #1 reduces the price of stock #1. Stock #2 is in the same industry group as stock #1, and stock price #2 is also falling. It is likely that investors holding stock #1 and investors holding stock #2 will quickly sell their stocks for any accrued profits or limit their losses. Unfortunately, the negative news reference for stock No. 1 may not be related to stock # 2. If this is the case, the price of stock # 2 has no reasonable reason to decline. Investors who know companies associated with Stock#2 often think this is an opportunity to quickly buy additional stocks in Stock#2 to take advantage of lower prices. In general, the market will soon have an unintended negative impact when waking up, and the price of equities #2 will start to rebound to its previous level. Knowledgeable investors are happy because they are buying at a lower price. Existing investors who sell stock #2 are not happy because they responded to the drop in stock prices and now realize that in this case, stock #2 should not lower prices.
3. Overwhelming News: As pointed out earlier, stock prices respond quickly to company-specific news. However, news reported on the same day or later in the same week can often cover early company-specific news. The initial news may cause the stock price to rise, but only after the release of news reports saw the direction of price changes. In most cases, investors cannot expect this situation. The consequences are unfair but true.
4. Who can I believe? : News and media resources often use "guest experts" who usually have full knowledge of certain aspects of the economy or the stock market. This is a positive factor in their news broadcasts. However, listening to the opinions of these experts shows that even experts rarely reach a 100% agreement on the issue at hand. Most investors are looking for answers and may be frustrated by the lack of a clear answer to the problem. Although this may be the closure of some investors, it has made a positive contribution to the entire industry because it provides investors with more questions about better understanding the "panorama".
5. Do not run with bulls: news and media reports can produce a response that reflects the "group mentality." This reaction is usually not based on sound investment principles, but on the basis of a group or individual perspective that allows the bulls to start running. Investors tend to have confidence in the stock quotes provided by television finance professionals or financial communications editors. When this "long position" buys a recommendation for a particular stock, usually after the close of the trading day, the herd responds quickly by issuing a buy order for the stock. When the market opens the next day, a large number of buying orders may cause the stock price to quickly rise or fall, and many of these buying prices will be filled at a much higher price than the previous day's closing price. When other investors see stock prices rise, they want to take action and place orders to further increase stock prices. Normally, this imaginary stock price is temporary, and the stock price returns to a more appropriate level, causing some cattle to lose money. The best advice is "Don't run with the bulls." Wait for the next week's price movement, and then make a decision based on your fundamental and technical analysis of the stock.
6. Keep an eye on old news: Many stock market traders fail to recognize the influence of institutional investors. Wikipedia defines institutional investors as "organizations that pool large sums of money into the company and their role in the economy is to invest in highly specialized investors on behalf of other companies." Examples of institutional investors include banks, insurance Companies, brokerage companies, pension funds, mutual funds, investment banks and hedge funds. Investors have the benefit of internal professionals who specialize in the company's pros and cons to determine who should buy the company's stock. The media did not realize the work of these professionals, nor did they realize that the agency's investment activities until the facts occurred once the price could rise. At that time, the media might unconsciously report the "old news" of price increases. This report allows the public to start buying the stock and further raise the price. This may lead to artificially high prices that will always fall after old reports are no longer reported. Observe technical indicators that provide indications of institutional activities. Make a wise decision. Do not reply to old messages.
Conclusion:
* Stock market investment is an adventure that should not be carried out by untrained people. However, through training, investment research and a comprehensive outlook on the economy, you can benefit from some wise investments.
* Appreciate news and media sources and understand their identities; every day people report as much as possible on a very complex global economy that is rapidly changing and adapting to a wide range of political and financial factors. Recognizing that writers and journalists are not and cannot be experts in everything, do not treat all news as gospel. Instead, develop larger image views based on multiple media sources over a period of time. Include this information in your training and experience and make informed investment decisions
Orignal From: Stock Market News & Media - How Media Influences Investment
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