Most stock market participants are news junkies. Every little morsel of data is assimilated to try and get an edge on the right price for a security or an asset class. These days, in a world of 24 hour news, there is no end to it, although how much of it is news rather than recycled press releases, gossip and speculation is more debatable. In the financial world news can be hugely valuable, which is why regulators go to such lengths to control it. Corporate results are released on a carefully controlled timetable and only through recognised channels. The ultimate news is “inside information” and that is rigorously controlled everywhere, even though the evidence suggests it doesn’t prevent it.

Apart from corporate news there is also geopolitical news. How will civil unrest in one country affect oil prices and what impact might elections have on taxes and government policy. Many claim this is the meat and drink of money management and managers are devoted to ensuring that they know exactly what is going on and making sure their clients know that.

It is worth considering though just how important news is in managing money. After all while everyone might wait with bated breath for a results announcement in practice share prices do not tend to move a lot in trading after the event. The common off the cuff remarks from analysts to a set of results is more often than not a dismissive “In line with expectations”. The best summation of the approach to result’s releases was the oxymoronic question once posed by a salesman to an analyst: “Are you expecting any surprises?”

The quest for news is a fundamental part of man’s curiosity about recent events and for clues as to what might happen next. In reality the humdrum flow of news does not make much difference to day to day portfolio management. For a start financial data is always out of date. At best results are released weeks after the end of a reporting period and in some cases it can be months. That means the financial conditions relevant to those results might be fifteen months old. That is a lifetime in markets. More importantly trying to predict business conditions is extremely difficult, let alone how companies will be impacted by them. The best that can be hoped for is…

Unlock the rest of this article with a 14 day trial

Unlock with Email
Unlock with Google

Already have an account?
Login here