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Stock market is volatile probably due to many factors, with HFT probably playing a significant role. That said, a jump in unemployment claims today is likely a
by ptero 7y ago
Stock market is volatile probably due to many factors, with HFT probably playing a significant role.
That said, a jump in unemployment claims today is likely a non-event for stocks: it was predictable and as such already priced into the market. Markets are driven more by expectations 6+ months from now, for which you get the full spectrum of "90% become poor for many years" to "pumping more cash in, use inflation to deflate debts and go back to business as before". I suspect we will get something in the middle, but its just a wild guess. My 2c.
- sjg007 7y ago>Markets are driven more by expectations 6+ months from now If this was the case then we wouldn't have since the crash due to Covid-19.
- chasd00 7y agoduring the market crashes we weren't we looking at 100-240k dead in the coming months and that was considered "good"?
- sjg007 7y agoMy point is that people claim that the market has already priced in the next 6 months. This is not true.
- ptero 7y agoNext 6 months includes a lot of uncertainty in expectations which is, statistically, priced in. Those expectations may have a distribution which might make for a strange average response. For example, consider a bimodal distribution: 50% +1, 50% -1. The average is zero, but everyone that believes in this distribution believes that zero is highly unlikely. Thus, if there are big benefit for guessing right and little for guessing zero, the actions can rapidly oscillate, seemingly without major external information (just based on whichever of two almost-equally-likely outcomes seems likelier).
- sjg007 7y agoStatistically priced in? Huh? I doubt that.