Categories: OLD Media Moves

The problem with stock market coverage

TheStreet.com’s Marek Fuchs writes Saturday about how the business media tends to make big conclusions about why the stock market is moving every day even though the moves aren’t that big.

Fuchs wrote, “We’ve been through this before, but it bears repeating. The business media, unlike the world at large, operates under the assumption that when there is a what there must always be a why.

“But I want to take a step back this weekend to point out to you the main difference between a summary of market action that’ll inform you a bit about what went on that day and one that runs the risk of leading you down the wrong path. The difference, in the end, is between thinking big thoughts and small.

“Normally, in life, it pays to think big and draw inferences, conclusions and then extrapolate. But daily movements of the market can be so meaningless or so tethered to fleeting events that you are better off gravitating toward the small. When it comes to a daily stock market move, even the what (say a 100 point move on a 13,000 base) can be so proportionally tiny as to basically be imperceptible.

“Is there a why? Well, probably, but it’s likely small too. So as you go on, savvy investor, forget the watermelon-sized conclusions that come from daily stock market moves. Leave extrapolation to the, uh, extrapolators.”

Read more here.

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

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