Explanations of daily changes in aggregate stock market indices are among the most ridiculous, speculative, and uncertain causal inferences made by journalists . . .

How do journalists know that a videotape appearance by OBL [Osama bin Laden] induced a swing of 00 [sic] points in a 500-stock index? To what trades did that explanation apply and to what degree? Can the journalist provide even one example of a trade for which that was the case? (“Yes, Lou, I moved out of IBM and into soybean futures this morning because I saw OBL take a walk on videotape.”) More that one example? Enough examples to explain the aggregate change? Compared to other reasons and strategies for buying and selling that day?


In addition, what is the causal mechanism behind the conventional “Wall Street Wrap”? As the statistican William G. Cochran wrote, “A claim of proof of cause and effect must carry with it an explanation of the mechanism by which the effect is produced. Except in cases where the mechanism is obvious and undisputed, this may require a completely different type of research from the observational study that is being summarized.”

The Wall Street Wrap makes a different causal claim every day, which requires, in order to differ from astrology, some evidence about mechanism.

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