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Politics : Ask Michael Burke
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To: Skeeter Bug who wrote (79124)4/5/2000 9:59:00 PM
From: BGR  Read Replies (2) of 132070
 
About market volatility:

It has been postulated for a long time as markets become more efficient wrt information flow, they will become more volatile, as every single piece of information immediately gets reflected in the price.

For example, assume a market where information flow is limited. A company preannounces earnings shortfall and nobody cares. Then later on, the company holds a press release and convincingly argues that the shortfall is a one time affair. Again nobody cares. The next day, the stock price opens around the same level as the previous day.

Next, consider the same situation in a market like today's. The starting and ending points will likely be similar, but there will be enough volatility causing Wayne to claim that the market is irrational, especially if he misses the press releases himself.

Incidentally, a more efficient market is a good thing.
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