NDING THE TOCK MARKET
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are driven largely by investors’ assessments of other investors’ evolving reaction to the news, rather than the news itself. That is because most people have no way to evaluate the significance of economic or scientific news. Especially when mistrust of news media is high, they tend to rely on how people they know respond to news. This process of evaluation takes time, which is
why stock markets do not respond to news suddenly and completely, as conventional theory would suggest. The news starts a new trend in markets, but it is sufficiently ambiguous that most smart money has difficulty profiting from it. Of course, it is hard to know what drives the stock market, but we can at least conjecture ex post, based on available information.
American Consequences
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