Wouldn’t it be great if investors were able to predict when the market would go up, and when it goes down? People certainly try. Whenever significant news happens, you can find commentators on both sides.
No matter what the news is, someone thinks it’s the next 2008, and someone else thinks it’s a booming opportunity. (There are always two sides to any trade, of course.)
The thing is, the short, sharp shocks in the market – the type of single or multiple day moves which really get headlines churning – normally come from strange, unpredictable things: comments or news that take investors by surprise, or involve uncertainty. We don’t know what these things will be ahead of time – if we did, the market would price them in and there wouldn’t be a sudden shock.
Just to give a few examples of how arbitrary market-moving news can be: