Roger, read Alan Ableson's column from this weeks Barron's. He's reporting that two false rumors were spread "on the Internet" on Friday - one that Abby Joseph Cohen had advised investors to "dump everything", another that Ed Yardini was calling for "2000 by the year 2000".
I suspect that Ableson was somewhat tongue-in-cheek in attributing the first 120 points to the Abby Joseph Cohen rumor, and the rest of the drop on the Yardini rumor...
I'd be interested in hearing where these were spread.
If these rumors were indeed at least partially responsible for the drop, we could see a significant recovery on Monday.
I note, though, that the Dow penetrated and closed below the 50-day moving average on Friday. The 200-day is around 7050. The bottom of the trend channel is around 6800. Stochastic is oversold now, but of course it could stay that way for some time.
(BTW, my trip to Johannesburg was cancelled, so I will be around this week.)
The "Internet rumor" angle is going to become more and more interesting over the next few years. It will be interesting to see how we deal with the assumed authenticity of anything that is read on the Internet. I'm not sure why this is, as I tend to assume the opposite.
However, I do think that there is a real problem with web sites (as opposed to Usenet, SI, etc. - SI is a web site, but when I say "web sites" I mean "non-interactive" ones). There is a strong tendancy to beleive that anybody who goes to the trouble to do a slick-looking, professional site is telling the truth.
I predict that over the next year or two, there will be at least one extremally shocking example of people beleiving an untruth spread through online discussion or a web site that will cause significant social turmoil. For example, an unfounded report of a nuclear attack, etc. Of course, this is likely to affect financial markets in a big way. |
