• TSLA
    188.89 USD 4.85%
  • MMM
    101.72 USD 2.71%
  • SP500
    4193.05 USD 0.02%
  • MSFT
    321.21 USD 0.89%
  • AMZN
    115.02 USD -1.07%
  • AAPL
    174.22 USD -0.55%
  • NFLX
    363.05 USD -0.64%
  • NVDA
    311.79 USD -0.28%
  • META
    248.34 USD 1.09%
  • BRKA
    501198.61 USD -1.19%
  • T
    16.38 USD 0.43%
  • ADBE
    372.09 USD 0.22%

Buy the rumor, sell the news: how does this phenomenon work?

Another well-known investing mantra, let's find out more about it.

The phrase “buy the rumor, sell the news” depicts a regular occurrence in the financial markets. Traders may transform this concept into a trading strategy based on their expectations for the future.

Suppose a trader anticipates that a future economic report or global event will influence the price of their asset in a particular way. When a trader purchases an asset based on this hunch, the strategy is in the rumor phase. Once the event has taken place or the report has been published, the news is made public. Traders then liquidate their positions, causing market movement.

Another enjoyable topic: Credit cards – the good, the bad and the ugly

This method encourages investors to search for undervalued markets. When possible news or information implies that an asset may generate additional future cash flows, or rise in value (price), this is a rumor. It is believed that the asset’s value will increase in the next weeks or months. Investors will purchase this asset until it is no longer undervalued.

Do you want to know more?

This article has a lot more to offer. Having an Investro registration allows you to read without any limitations. It's FREE and will only take few seconds.

Join us

Have you already registered? Sign in.

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.


Post has no comment yet.

Want add your comment? Sign up or Sign in