The Market Moves Based on Rumors

Have you ever heard the phrase "buy on the rumours, sell on the news"? If so, have you ever practiced it? My advice is not to apply it blindly, as there are many factors to consider when making buying or selling decisions. However, it is true that the market today, especially the capital market, moves quickly following the emergence of rumors. In Dow Theory, it is even stated that "market discounts everything," which means that the current prices in the market reflect future expectations.

Rumors indeed have their own place in influencing the movement of stock prices and other investment instruments. You can see the impact of rumors when the peak of this financial crisis occurred. Hundreds of points can easily vanish as soon as rumors about banking and economic data emerge. Anything can develop into a rumor today, ranging from company performance, financial reports, economic data, to the condition of individuals related to finance and investment.

Financial Infotainment

It's not just celebrities who are buzzing with gossip through infotainment; the same applies in the world of finance and investment. Although the mechanisms and content differ. Usually, in the world of celebrities, rumors or gossip can either make the celebrity more famous or diminish their popularity. In fact, there are parties that intentionally create certain gossip and rumors to make films, music albums, and others more famous upon release.

With a principle that is roughly the same, this also applies in the financial world. Media play the most crucial role. Media giants like Bloomberg, Reuters, Financial Times, Forbes, and Wall Street Journal are usually the main sources of rumors in the world. Through their trusted sources, these media often surprise the market, sometimes positively and often negatively. The rumors that emerge usually depend on the general conditions that are happening. For instance, in a financial crisis like this, many rumors about banking are surfacing. Some have a positive tone while others have a negative impact.

Now, for them, the fastest channel to convey these rumors is through the internet, in addition to television, of course. And that means we need to frequently "browse" their websites. Not just ordinary browsing, but we also need to have the ability to identify which news is a rumor that will influence market movements.

Whoever is Quick, Gets It

When it comes to this, we as market players and investors must have speed in searching for rumors that could significantly impact market movements. What needs to be done is actually simple; watch television stations like CNBC or Bloomberg TV for a global scale. Additionally, do not forget the websites of the aforementioned news media. And the more comfortable thing nowadays is that there are plenty of gadgets available for us to check the websites of these news media. If we are quick enough to see the news developing in the market, after that we need to have a deeper understanding of a rumor.

Need Further Analysis

When a rumor emerges, it can take various forms. Some are reports, merely analyses, or even future estimates filled with calculations. Usually, if a rumor just appears, we can conclude its impact will be negative or positive on the market just by looking at the title. However, as more market players read this rumor, a deeper analysis of the impact of the rumor is needed. Additionally, regarding the likelihood of the rumor being true or not.

In other words, if the rumor starts to be digested by the market, its impact on market movements can weaken, become ineffective, or even become stronger. It depends on the "digestion" results of many market players. It doesn't hurt to pay a little attention to the gossip circulating in the market. If we can know the developing rumors in the market faster than others, we might have a slight advantage in making buying or selling decisions. One thing to keep in mind before we "sell or buy on the rumours" is to never take a rumor that has just emerged at face value. Make sure to conduct a little analysis and research first.