{"id":54848,"date":"2020-10-18T15:35:35","date_gmt":"2020-10-18T22:35:35","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=54848"},"modified":"2020-10-18T15:39:01","modified_gmt":"2020-10-18T22:39:01","slug":"why-stock-market-signals-outweigh-headlines-lessons-from-pandemic","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2020\/10\/18\/why-stock-market-signals-outweigh-headlines-lessons-from-pandemic\/","title":{"rendered":"Why Stock Market Signals Outweigh Headlines: Lessons from A Pandemic"},"content":{"rendered":"\n

The Misdirection<\/strong><\/h2>\n\n\n\n

The New York Times (NYT) created buzz with a report alleging that members of the Trump administration enabled “elite traders” to profit off the coronavirus-driven collapse in the stock market. While the administration confidently reassured the public about the coronavirus (COVID-19), members of the administration reportedly shared their concerns about “uncertainties” at a private board meeting at the Hoover Institution. That information in turn made its way to traders. The drama unfolded from February 24th to the 26th as stock market signals contradicted the pandemic headlines.<\/p>\n\n\n\n

The PBS News Hour interviewed former investment banker and author William Cohen on this story. The discussion explored the moral implications and the complicated legal questions. While these topics are important, I am particularly intrigued by the related trading lessons. This episode represents yet one more reminder that stock market signals and actions are more important than words. At the time, I was not even paying attention to the claims from the government or official agencies and institutions. In a February 1st post post reaffirming my claims about a topping stock market, I even encouraged readers to ignore predictions about how the coronavirus pandemic would unfold<\/a>.<\/p>\n\n\n\n

“There is a lot of focus on the risks of the coronavirus, but I think predictions are futile. I scoff at pundits who get on the air and provide their reassuring words or their red siren alarms; they are mostly guessing. Market signals are sufficient for sorting through the noise. The management of the growing pandemic is following a typical pattern: spotty info, downplaying, slow concessions to containment measures, aggressive containment measures, and now growing reports all over the globe. Through it all, politicians and health officials will scramble to keep the public calm.\u00a0“<\/p><\/blockquote>\n\n\n\n

In other words, I was intently watching the stock market, not the headlines, not the tweets. My posts on the stock market at the time focused on the messages from the market.<\/p>\n\n\n\n