If you’ve followed the stock market for awhile, you’ve probably gotten insights and ideas from news events. Whether you’re getting your news from TV, newspaper or online mediums – people believe it exists for a certain reason.
People believe that by following news and trends – they’ll be able to find the cause and effect of the stock rising higher or falling lower. Example: a news report says, “stocks head higher as oil prices rise.”
The problem is that stocks don’t follow the cause and effect consistently as people want to believe. Stocks behave erratically. They behave in ways we can’t always predict. There’s never one direct thing that effects how the stocks move – rather many different variables coming into play. That’s why it’s more important to look at the big picture. You have to put together many concepts and events to see the stocks in your favor.
However, the news is really there for entertainment or general awareness, not for you to make a cause and effect relationship in the stock market.
Remember not to use the news as dedicated information on how you should be trading your stocks – there’s never a one-to-one causality between what the news is reporting and how the stocks are moving.