Oct

16

 There is a nice passage in Jack Schaefer's Old Ramon, who by the way is one of my 3 favorite American writers of the 20th century, that talks about the stupidity of sheep. He says "the individual sheep is stupid, but the herd is very smart. They always know the right way to go, the right thing to do (especially when guided by the dog and shepherd).

The stock market reminds me of that every time there is an earnings report of a major company. It originally does something stupid, as if the company reporting like Intel, Netflix, or Goldman $achs were the only company. But then after a proper time, it does the right thing.

Andrew Goodwin writes:

The Chair's points on reversals after single company earnings and upon the law of the ever changing cycles make great sense in light of the discovery of the hacking of the earnings release sources and the subsequent sale of the information to traders.

One phenomenon that likely would revert would be the predictive property of price moves in minutes prior to announcements of earnings. If the regulators can shutout the hackers from the news wires that hold the earnings reports for a release time after preparation of the news then a much smaller batch of insiders could use them.

One thinks that the true insiders would have to act earlier than in the brief intervals before releases that allow the hack info buyers to take less time risk in acting close to the news event.
 


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