Professor Elam

Tuesday April 13, 2010

News reports would have you believe that disappointing earnings from Alcoa Aluminum brought the stock market rally to a screeching halt. The fact of the matter is that news is sort of a white noise to the stock market. Popular opinion and mood has much more to do with stock prices, take a look. 

Alcoa made $2.5 B in 2007, lost $74 million in 2008 and lost, are you ready, $1.1 billion in 2009. Yet the stock rallied all of 2009!  The mood changed form negative to positive in March 2009 and people simply started buying stock again. 

The news is forever trying to link an event with what happens in the market, the results are not always causal. 

The reason for the stock market to halt a bit is that it is up over 60% in the last year, needs a rest. With stocks backing off now, expect more stories of investor disappointment the next week or two….