Explanations of daily changes in aggregate stock market indices are among the most ridiculous, speculative, and uncertain causal inferences made by journalists.
My son was looking over my shoulder as I checked my online portfolio tracker . . .
The Dow was down, the Nasdaq was down, the S&P was down, all the stocks I own or track were down, nothing but red numbers from top to bottom.
“All your stocks went down,” he said.
That is a masterful restatement of the obvious, but it got me to thinking about financial reporting in general. The financial reporter is expected to be a storyteller . . . not just to say that stocks went up or down but why they went up or down.
“It was a down day on Wall Street following the news that Alan Greenspan cut himself shaving this morning.”
Look: Stocks can only do one of three things on any given day — go up, go down, or stay the same — and 99 times out of 100, they do so for no particular reason at all.
Over time, a stock moves up or down for reasons related to the health of the underlying business, but in the short term, it’s just random.
It would be refreshing to switch on CNBC or CNN or whatever and hear someone just dispense with the pretense:
“Today on Wall Street, all your stocks went down.”