5. Rumor Has It
“Buy the rumor and sell the news”
—Trading adage
At approximately 11:45 a.m. on Monday, January 7, 2013, the Australian Financial Review website reported that ANZ bank had cancelled a $1.2 billion loan to Whitehaven Coal—for environmental reasons. The news triggered a sharp selloff in Whitehaven Coal stock. The slide worsened as other news outlets picked up the story. Before trading in the stock was suspended less than an hour later at 12:41 p.m., Whitehaven’s market capitalization had fallen almost AUD$300 million, or about 9 percent. The “news” was soon discovered to be a hoax perpetrated by an anti-coal mining activist, and the price of Whitehaven Coal shares quickly recovered when trading in the stock reopened at 1:30 p.m. ...
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