Interesting blog post about the connection between news headlines and stock movement. Jean-Philippe Bouchaud and staff at Capital Fund Management in Paris studied over 90,000 different headlines from Reuters and the like and their impact on stock prices.
They couldn’t find any correlation between the two. See the New Scientist article on the study (sub. required). According to the article, “The research by Bouchaud and his colleagues indicates that instead, market psychology places a large role – prices continue to rise or fall long after they have reached the ‘fair price’ because of the prevailing expectations in the marketplace. When a correction does occur, it can be triggered by a random piece of news, which then becomes amplified by social feedback.”
