I have an observation that comes from blissful ignorance about the stockmarket, but appears to be somewhat accurate. Feel free to disagree.

The stockmarket is run on news. By controlling news: by delaying information, putting spin, leaving out important details, starting rumors, being misleading etc., you can control the stockmarket. Is this not true? I get the impression that the stockmarket is like a shark, meandering back and forth with it's steel black eyes looking for the smell of blood. But in the case of the stockmarket it is not blood the shark is looking for -it's news. Tidbits of a rumor that somehow gets confirmed...It's a bloody hit. You sharks out there, is this true?

-- Jerry (234@777.com), January 18, 2000

Answers

The stock market may lurch or thrash on news, but what is called "sentiment" is of greater importance. Essentially, sentiment is the conventional wisdom of the market about what the future is most likely to bring, along with some conventional wisdom about what kind of indicators or news would turn sentiment in a different direction. Sentiment moves more slowly than the knee-jerk reaction to news items, but the movements are much larger and more sustained. And far more money is made and lost on those movements. That is why the little investors have cleaned up, lately. They are riding a wave of sentiment and don't pay any attention to news.

As for controlling news -- really big investors do not rely on CNBC, the WSJ, AP wire, or USA Today. They have their own sources of news. Sources that prove false are not kept on the payroll for long. The type of truth that interests people who invest 100 million to 10 billion a day cannot be hidden from them by a mere process of spin.

-- Brian McLaughlin (brianm@ims.com), January 18, 2000.

Brian- Really good answer, and sadly true!

on de rock

-- Walter (on de rock@northrock.bm), January 18, 2000.

Exactly right. Finally, someone who's THINKING!

-- Dave Polich (wavedave@earthlink.net), January 18, 2000.

Brian- Insightful answer. But why didn't the sentiment of fear and uncertainty surrounding Y2K do anything to the stockmarket? I believe there definitly was a sentiment of fear abounding through out the world. If nothing else look to the 50 millon dollar bunkers the government built and everyone in the world staying home New Years eve!

Perhaps the greed had/has over ridden any normal fears (?)

-- Bill (Greenville@usa.com), January 18, 2000.

Brian- Insightful answer. But why didn't the sentiment of fear and uncertainty surrounding Y2K do anything to the stockmarket? I believe there definitly was a sentiment of fear abounding through out the world. If nothing else look to the 50 millon dollar bunkers the government built and everyone in the world staying home New Years eve!

Perhaps the greed had/has over ridden any normal fears (?)

-- Bill (Greenville@usa.com), January 18, 2000.

>> But why didn't the sentiment of fear and uncertainty surrounding Y2K do anything to the stockmarket? I believe there definitly was a sentiment of fear abounding through out the world. [...]

Perhaps the greed had/has over ridden any normal fears (?) <<

The little guys paid little attention to Y2K, or else took their cue from John Koskinen and the numerous glowing press releases. So their sentiment remained bullish.

The big guys were worried about Y2k, but the Federal Reserve flooded the system with liquidity from September onward. This was a solid-gold guarantee that greed would be well-rewarded with profits in Q4 of 1999. This bait was taken gladly, enthusiastically, ravenously, with many shouts of Hallelujah!

Leastwise, that's how it looked from my low perch.

-- Brian McLaughlin (brianm@ims.com), January 18, 2000.