Stock Market News & Media How does the media impact investments

 


The economy and other related topics have been the main theme in news and media reports over the past year. The average for news and media coverage is more than 40 million viewers per day, news on television has a wide audience. With such a crucial message and such an enormous number of viewers, it's not a surprise that the media can influence Investors News about trading and buying of stocks every day. This article reveals some of the facts that are not widely known about the influence of the media on the decisions of investors and how they can do about it.

Here are six examples of the ways the media and news influence the stock market investment.

1. Specific References: Specific references from media and news sources to a specific company or stock symbol can have a significant influence on investment activities connected to the stock. In addition, the responses are rapid. Within minutes, a stock's price will begin to rise when the reference to the media can be positive or begin to decrease in the event that the reference to media is negative.

2. Negative impacts: Typically the result of a specific reference within the news and media may affect stocks of other companies in the same sector or industry sector in the same way as the stock being referenced. However, there are instances where the referral can have undesirable consequences.For instance the negative news mention to Stock #1 reduces the value for Stock #1. Stock #2 is part of the same group of companies as Stock #1, and its price falls too. It is very likely that those who own Stock #1 and Stock #2 owners will both be quick to sell their stocks to take advantage of any gains that accrued or limit their loss.Unfortunately the negative news report for Stock #1 might not apply for Stock #2. If that is the case, there's no valid reason to cause the price of Stock #2 to decrease. Investors who are aware of the business associated with Stock #2 typically consider this to be an opportunity to buy more stocks of Stock #2 to benefit from the lower price.Generally the market will soon become aware of the negative effect and the price of stock #2 will start to rise from where it was. Investors who are knowledgeable are pleased because they purchased at a lower cost. The investors who were able to sell Stock #2 are unhappy because they responded to a fall in price, and have now realized the fact that Stock #2 should not have fallen in value under these conditions.

3. The Overriding News we mentioned earlier, stocks react rapidly to news that is specific to a particular company. But, news released later on in the same week or day will often take precedence over earlier news about the company. The first news report might have caused a stock's price to start rising but then see an abrupt change towards the upward direction once the second news release was made. In the majority of cases investors are not aware of the consequences of this scenario. are unfortunate, yet the reality is.

4. Who do I trust? Media and news sources typically make extensive usage of "guest experts" that are generally knowledgeable about a particular part of their economy, or the stock market. This is an excellent feature of their broadcasts. But watching these experts shows that even experts aren't always fully in agreement about the subject in question. Many investors are seeking answers and could be disappointed with the inability to provide definitive solutions to their questions. While this might be a source of frustration for some investors, it is an impact on the entire industry because it provides the investors more parts of the puzzle to better understanding what is the "big picture".

5. Don't Run with the Bulls: News & Media reporting may trigger a reaction that displays "herd mentality". The reaction generally not founded on solid investment principles but rather on the judgment of an individual or group which can set your bulls running.Over time, investors trust stock recommendations made by a TV financial journalist or an editor of a newsletter on financials. If the "leader of the bulls" gives a buy recommendation for the stock of a particular company, typically following the closing of the market on the day's trading the herd reacts by placing a buy order for the stock. When the market opens on the following day, the large quantity of buy orders could result in the price of the stock to surge or even gap up, and many of these buy orders are filled at prices significantly over the previous day's closing price. When other investors observe that prices are has been rising, they are eager to join in the trend and place orders, further increasing prices of the shares. In most cases, this increased price of the stock is only temporary until the price is restored to its normal levels and leaves a portion of the group in a losing position.The most effective recommendation would be to "do not run with the bulls". Keep an eye on what the price will do in the next week, and then take a decision according to your own research and technical assessment of the stock.

6. Keep an eye out for Old News A lot of investors do not understand the significance that institutional investors have on their business. Wikipedia define the term "institutional investors" to be "organizations that pool large sums of money and invest those sums in companies. Their role in the economy is to act as highly specialized investors on behalf of others." Some examples of investors who are institutional include banks and brokerages, insurance companies, retirement funds, mutual funds investment banking as well as hedge funds.Institutional investors benefit of an internal staff of professionals who are experts in analyzing the benefits and drawbacks of a business to decide if the institution should purchase that stocks. The media is unaware of the work performed by these experts, nor of their investment activities at the institution until it is too late, after the price is raised. In that moment, the media could accidentally report that the "old news" of the price hike. This could lead people buying the stock, raising the price. This could result in artificially high prices, which can eventually fall once the previous news is no longer reported.Watch for indicators in the technical space that indicate the level of activity by institutions. Take a shrewd decision. Do not react to old information.


Comments

Post a Comment

Popular posts from this blog

How to Avoid the Expense of a Reception Desk

Image
The reception desk has been the heart of the business for many years. It has come a long way in the past century from its humble beginnings as a secretary desk. Today's Reception desk can handle all of the business communications needed, from email to conferencing. The main goal for the Antikes Buffet manufacturer is to provide their clients with top quality and durable furniture that will last for years. The Reception desk is a place where a lot of business communication occurs. Reception desks have the job of both presenting information and storing documents. Many Reception desks are custom built to specific measurements and designs. They can be built to be visible from the front door or have a paneled top to shield internal storage. The Reception desk has evolved into not only a place to store and present documents, but also an environment to create professional-lookinglooking presentations to new clients. If you consider the first impressions of any visitor, a well-designed Re...
Read more

Information on Augmented Reality The Development

Image
Are you able to create an alternative perception of reality? Augmented reality is exactly what you require to know why your reality seems so absurd. In particular, augmented reality isn't real in any way, but rather a virtual experience. At one point, there was a time when this was available and people had to go about their daily routines. In the past, the farmers were all working on their farms, and attempting to survive. As you can notice, things have evolved over time. Take sports as an example. The way we play sports has changed significantly in the past 100 years that it's not difficult to comprehend the reason. There was a time when you had to actually be present to take part in the sport however now, you are able to view it on TV or stream it online. Internet. It's fascinating to observe the way things have evolved thanks to a small amount of technological advancement. Today's world may change within a couple of years. Augmented Reality development implies that c...
Read more