When Old News is … Bad News
United Airlines stock temporarily dropped a *billion* in value, apparently on the basis of a Google news routine that surfaced an OLD bankruptcy filing story that made it to Bloomberg which then created a stir in investment circles.
Still reading the details of this story,but it looks to me like support for the idea that the stock market incorporates news in ways that can be dysfunctional. A common misconception is that insiders are making all the money when in fact many insiders actually *cannot* trade as easily as outsiders thanks to SEC rules. However you’d have to be naive to think that there are not many abuses in the system – mostly I think from complex, quasi-legal arbitraging of huge positions by the big players.
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Wall Street has always been quick to react to news. Oft heard is the phrase: Buy on the rumor, sell on the news. Given that situation there is little time for fact checking. People place faith in computers and simply don’t notice in time that some story is stale-dated. Bank tellers no longer add or subtract, they punch a calculator. Clerks look at the ‘change due’ amount no matter how erroneous it might be. A bot digs up an out of date story and somehow re-circulates it? Well, he who hesitates so as to double check dates can lose alot of money… or make alot of money!