The market is down because... [sound of shaking magic 8-ball]

Let me share with you a piece from Money Central, but I am not picking on them, you can find the same crap on every newspaper or TV channel's financial section:

The push to dump stocks came in response to news that artillery fire was exchanged overnight between North Korea and South Korea. Though tension between the two nations has been persistent, the latest episode marks a dramatic escalation of the tone between them.

That development added to the distress of market participants, who have long held concern for the fragile state of finances among countries in the European Union periphery. Even Ireland remains a point of worry as it has yet to completely structure a bailout package and implement austerity measures.

Distress and uncertainty moved many into the relative safety of the dollar, which was up 1.3% against competing currencies at the close of trade. The advance marked its biggest one-day bounce in a month and put the currency at its best level in almost two months.

But my title is a lie, these guys are not looking at a magic 8-ball. What they are looking at is the rest of the newspaper. Let me share the recipe:

  1. See if the market is up or down.
  2. Up? Then look at the news and check for good news.
    1. What? No important god news? Awesome! Then figure out how something that looks bad is actually good. That's a golden chance to be declared insightful.
    2. Good news? Bingo, that's why the market is up.
  3. Down? Look at the news and check for bad news.
    1. Bad news? Ok, that's why.
    2. No big bad news? Great! Then something that's good needs to be described as "causing uncertainty"

In the real world, the business analysts have only the foggiest notion of why the markets move as they do. In fact, if they had a notion, the market wouldbe predictable. If it were predictable, then savvy investors would beat the market.

And that doesn't happen.

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