| The media has always had the power to influence | | | | economic state of affairs, before the general |
| behaviors, whether you are talking about investors, | | | | population of traders would be expected to sell and |
| ethnic persecution, or potential catastrophic events, | | | | dump. When specific companies are named and |
| the media releases information and the public reacts. | | | | projected to head south in the near or immediate |
| However, there is more to investor reaction than | | | | future, the stock holders want out immediately. |
| whether there is discernable and foretelling | | | | Fluctuation predictions really have much less of an |
| information in the news. There are psychological | | | | affect on mass dumping. Generally, there is no impact |
| aspects that come into play when traders are looking | | | | when the media reports a decline in the economic |
| to determine the media's information as a warning or | | | | climate overall, nor is there a great response when |
| just fluff. | | | | the media reports that there is a warming economic |
| While there are many psychological stances on loss, | | | | climate. |
| any trader who experiences loss or is experiencing a | | | | The basic psychology behind these results is pretty |
| current loss is likely to react within the realm of their | | | | simple, and a savvy investor can actually learn to |
| personality as well as categorically in line with their | | | | profit from media news that helps to prompt a mass |
| own value system. If a loss means that the investor | | | | dumping. Specific companies are those that the |
| means they are not smart enough for trading, they | | | | investor chose themselves, they are responsible for |
| may hang onto it for an extended period of time to | | | | their own choices and often the news that they |
| avoid the inevitable for as long as possible. If a loss | | | | have "made a poor choice" creates a regretful sense |
| to an individual trader is just an event without any | | | | of wounded pride in the average trader. Thus, those |
| ego attached to it, changes are pretty good that he | | | | who chose to invest with the specified company |
| or she will just dump the stock, minimize their losses, | | | | now try to seek out redemption or damage control |
| and move on. These psychological factors play a role | | | | by dumping the stock. Since any single individual |
| in any single investor's response to media coverage | | | | trader has absolutely no power over the market |
| and interpretation. | | | | conditions, this becomes less personal, and usually no |
| The media does have the power to influence the | | | | action is taken. |
| majority of investors, bad news often leads to a high | | | | When the media begins delivering unsettling news to |
| number of dumped stock and good prices often lead | | | | stockholders of specific companies, you have the |
| to a high number of profitable sales. These sales then | | | | opportunity to decide whether the company is in a |
| cause a different fluctuation in the market. When you | | | | downward spiral that will end on the bottom or if |
| combine the media influence, the personal | | | | they have simply hit a small slump. In the end, as the |
| psychological aspects of any given trader, and the | | | | majority of traders are unloading this particular stock |
| general fluctuation of market conditions, you end up | | | | you may have an open window to follow the golden |
| with an interesting scenario governed by | | | | rule of trading. Buy low and sell high becomes a prime |
| expectations of public reaction. | | | | opportunity for those who can recognize that media |
| Studies have proven that the media does not have | | | | coverage is just that, and over reaction leads to |
| carte blanche over the general trading population. In | | | | great opportunities for the emotionally aware |
| fact, the media news must be specifically related to | | | | investor. |
| a company, as opposed to the general climate of the | | | | |