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Get Started in Shares by Glen Arnold

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The anticipation machine

Don’t forget that the market is an anticipation machine. This means that there are thousands of people, some professional, some not, who try to forecast what news about a company or the economy will come out in the next few weeks. They then go into the market to buy or sell on the expectation of their estimates being correct. Thus, share prices move up or down ahead of news announcements, such as increased profits or a massive rise in unemployment.

It sometimes confuses the novice investor that the market response on the day of the announcement is the opposite of what ‘common sense’ says it should be. So, if a company announces a doubling of profits, the market newcomer thinks it perverse that the share price falls. The ...

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