Monday, 27 April 2009

Commentary: Your source for news, commentary, and stock info

Stock market moving on swine flu? Bloomberg says U.S. Stocks Fluctuate as Health-Care Companies Gain on Swine Flu, GM Rises. Just the ridiculousness of the article title should tell you all you need to know about what the media says. They actually think that stock prices of medical companies are reacting the news about a swine flu outbreak in Mexico, Canada, and the U.S. It’s just asinine to make that conclusion. Most mainstream media operate in the world of physics. By that I mean, they believe (not just them, but many people) action is followed by reaction. “Oh, well _______ happened, so that means that ________will happen because of it.” The fact of the matter is that the market itself is a living, breathing organism (in the hypothetical sense). It’s made up of millions of investors making buy and sell decisions over and over. The market moves based on what all the investors are thinking and feeling. A chart is simple a representation of human psychology. Think about this, have you ever seen a day where the news was so bad but the market went up? In your own mind, you thought that the bad news would affect the market negatively. Instead, the market didn’t care about the bad news and finished up. At the end of the day, the media scrambles to write a reason on why the market did what it did. And a lot of the time the reasons they give are just ridiculous. Today is one of those days. Health care companies going up because of a swine flu, is just ridiculous. A stock is going to go where the major of investors thoughts, feelings, and decision lead it. If most investors are bearish, the stock will go down. If most are bullish, it will go up. A one day move means nothing. The trend shows the direction of how the majority of investors are thinking. Secondly, the swine flu is reportedly a hybrid mixture of bird flu, swine flu, and human flu (i.e. Asian, European, and North American flus). It’s very rare for viral strains from two different animals and humans to combine and affect humans. Especially when they are from different continents and then showing up in one place. If you are well read on influenza (which I am not), then you will know this. Once a virus is contracted by someone, it replicates itself within a cell and mutates possibly 10 to 1 billion times. By the time it has all of those replications and mutations, the virus may become a less virulent strain and maybe not even be lethal by the time it passes through many people. If we begin to see people dying from this particularly swine flu popping up all at once in completely different geographic areas and occurring naturally, It’s highly unbelievable and most likely is a weaponized release of a deadly pathogen.

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