Making sense of conflicting stock market headlines
Tess Vigeland talks to Reuters blogger Felix Salmon about how to make sense of the conflicting headlines coming from business journalism.
Here is an excerpt:
VIGELAND: This to me really encapsulizes why people are so freaked out about what’s going on right now, because they read one thing here, they read anything there and nobody knows what’s going on really, right?
SALMON: The New York Times was particularly alarmist, and all of this talk about Dow 1,000 — which of course is ridiculous. I mean, it’s pretty much physically impossible, given where the Dow divisor is to even get to Dow 1,000. You just can’t have stocks trading at that level. It’s basically giving people permission to panic, and that’s really not very helpful.
VIGELAND: It’s not. Frankly, I don’t find any of this very helpful. But people do read the newspaper and they do follow things like this, despite the fact that we tell everybody your personal finances are very individual and you can’t try to predict what’s going to happen.
SALMON: Especially not by reading a random piece in the New York Times, talking about a guy who draws lines on charts and then pulls a number out of thin air. These things are not based on any real fundamental analysis, he’s not an economist. Even if he was an economist, you probably really shouldn’t listen to him, because economists are notoriously bad at forecasting anything. But this guy basically just draws lines on charts. He’s an astrologer.
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