What Makes Stocks Move – An Empirical Analysis
We all know that news moves stock prices. We also know that all news is not equal. Some news has a much greater bearance on the stock prices compared to others. Some news leads to change in prices right away, while others only change long-term outlook. The Coseer team put together our experience, empirical evidence and artificial intelligence to a simple question – What makes stocks change their prices? We are keen to learn what the community has to say about it.
For context, Coseer summarizes millions of articles containing financial news or opinion to few bullet points, and presents them collated along portfolios. Coseer prioritizes messages as per their impact on investing decisions, so that investors and their advisers can focus on what matters. To read more go to www.coseer.com/finance.
At a high level we brand each insight as one of:
- ACTIONABLE, which may lead to a trade in the short-term.
- SALIENT, which may change long-term investment opinion.
- DEVELOPMENT related, which report significant events.
- KNOWLEDGE, which provide context for other reports, but are not that useful on their own.
In this context, really what we want to know is – What kind of news is immediately Actionable? What makes a broker pick up the phone to recommend a trade? What gives a wealth manager the confidence that the sudden stock jumps are justified? What, when known to investors, assures them that their advisors are acting in their best interests?
We thought we will begin by answering what makes stocks change their prices. Below, we have put our list of top 10 factors in decreasing order of average near-term impact to stock prices. The list is far from exhaustive and at times gets subjective, but hopefully its a good conversation starter.
- Acquisition of the company
- Lowering guidance
- Earnings miss
- Increasing guidance
- Earnings surprise
- Analyst rating downgrade
- Departure of key personnel
- Analyst rating upgrade
- Acquisition by the company
- Launch of new products
We are keen to learn what the wealth manager/ broker community thinks of this list. Feel free to leave comments for us or message us directly. Do follow us to stay tuned of the discussion.