Friday, July 29, 2011

Stock Market: Man Bites Dog

"Man bites dog". This is an old rule for newspaper writers. They need exciting news, to shock the people, and sell their texts. Therefore the media traditionally focus on scandals and shocking stories and don´t bother much with boring good news.

It seems that the stock market, which is strongly influenced by the media, now also follows the "man bites dog"rule. The stock market & media are focusing on bad news now, like the U.S. debt, the European debt crisis, the nuclear radiation in Japan and more.

The good news is blended out, as shown by the falling weekly jobless claims (accorting to reports yesterday, the number dropped by 24,000 to 398,000, a 3-month low) or continuing strong company reports (yesterday Starbucks reported; that profit climbed in last quarter by 6% and sales at U.S. cafes open at least 13 months jumped by 8 percent ). These reports indicate, that the job market is improving and the consumer expenses are still strong. Who cares?

“Optimism is out; pessimism is in" reports the Kauffman Foundation’s in their latest quarterly survey of “leading economics bloggers”. ( Yes, many bloggers are competing with the media and try to overtrump them.

But this could be good for investors, at least those who think long term. They get cheap prices when they buy stocks now because too much pessimism is priced into the values. It seems that negative sentiment delivers an occasion to invest.

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