Overreaction and stock market

His tweets are news events, an indication of his intentions as president, and will produce reactions in the economy that could range from a minor fluctuation in the value of a particular stock to something more dramatic that constitutes a market event.

For instance, on Dec.

It took only 10 seconds, according to the calculations of Nanex, a market analytics firm, for Boeing stock to start trading down, ultimately sinking the stock value by 1. Nearly a week after his Boeing tweet—almost as if to even the score—he did the same thing to Lockheed Martin, tweeting complaints about the costs of F fighter jets even though that information is old and has been widely available.

But the market was better prepared this time.

Mind you, Lockheed experienced an even greater loss than Boeing—2. Or, it could mean something more insidious: This would amount to insider trading, which is a criminal act, but an unlikely occurrence here. Even that much is a gift to professional traders, who can profit handsomely from short-term moves, even more so if they reflect a knee-jerk overreaction and are promptly reversed. Researchers have been investigating the relationship between social media, news media, and stock movements for some time.

A study based on sentiment analysis and data mining algorithms determined that microblogs, as the study classified the still-nascent Twitter, do have an impact on investor trading behavior. It would be prudent for Trump to start thinking of his tweets as fragmented presidential addresses. Just a couple of virtual stock market script later, their hypothesis got some real-world support.

Ina fake tweet emerged from the official account of the Associated Press announcing: Two Overreaction and stock market in the White House and Barack Obama is injured.

Does the Stock Market Overreact? on JSTOR

The erroneous tweet, for which a Syrian hacking group claimed responsibility, forced financial experts to consider the ability of a character message on a young social media platform to move markets in a big way. The market will certainly treat them that way. According to data compiled by the Wall Street Journal Market Data Group business christian easy home make money online small ways back tomarket jumps often followed State of the Union addresses.

Immunotherapy Bearish Overreaction Can Create Opportunity - Loncar Cancer Immunotherapy ETF (NASDAQ:CNCR) | Seeking Alpha

Because the State of the Union address is traditionally where presidents identify their overreaction and stock market priorities and legislative agendas, as major news items, they typically are followed by a significant market reaction. Trump, obviously, hates wasting time on formalities and prefers to speak in tweet, no matter the topic. Recently, in six consecutive tweets, Trump outlined his intentions to significantly reduce taxes on corporations and levy a 35 percent tariff on businesses that move jobs out of the United States:.

This tax will make leaving financially difficult, but Please be forewarned prior to making a very A press conference or major address lets investors know they should anticipate big news, something that might affect the market. It is also possible for the president to profit off of the power of his tweets.

But financial markets are volatile and based on the moods and sentiments of fallible investors. This article is part of Future Tensea collaboration among Arizona State UniversityNew Americaand Slate.

Future Tense explores the ways emerging technologies affect society, policy, and culture. To read more, follow us on Twitter and sign up for our weekly newsletter.

Alyssa Sims is a program associate with the International Security program at New America. Follow her on Twitter.

Behavioral Finance: Key Concepts - Overreaction and Availability Bias

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FROM SLATENEW AMERICAAND ASU. President-elect Donald Trump speaks at the Wisconsin State Fair Exposition Center on Tuesday in West Allis, Wisconsin.

Recently, in six consecutive tweets, Trump outlined his intentions to significantly reduce taxes on corporations and levy a 35 percent tariff on businesses that move jobs out of the United States: Trump realDonaldTrump December 4, THE UNITED STATES IS OPEN FOR BUSINESS — Donald J. FOLLOW SLATE Twitter Facebook Instagram. SLATE ON IPHONE ANDROID KINDLE.