Apprenticed Investor: Lose the News

Barry Ritholtz has published a great story on TheStreet web page. I found it through The Big Picture blog. This is one of the best market related stories I have read lately and I think it is absolutely mandatory reading for every trader or investor. It tells why stocks often react just opposite to the news, like sell-offs on good earnings report.

Apprenticed Investor: Lose the News
TheStreet.com
By Barry Ritholtz
RealMoney.com Contributor
6/16/2005 7:10 AM EDT

Have you ever noticed how the stock market reacts differently to the same reported events?

Why is it that we sometimes sell off "in response to rising oil prices," but at other times the "market rallied, despite the rise in the price of crude"?

Is it possible that the markets are responding to forces other than the latest headlines?
Short answer: Absolutely. Yes.
Longer answer: Keep reading.

First, news is hardly new.
Second, the vast majority of news is irrelevant to your investing.
Third, because news organizations often try to appeal to as many people as possible, they have a disconcerting tendency to catch various trends just as they are peaking.

Read further:
The Big Picture: Apprenticed Investor: Lose the News
TheStreet.com: Apprenticed Investor: Lose the News