TELL stock investors that the economy is influenced by activity on the sun and they would never believe you. That doesn鈥檛 stop plenty of them responding to other equally irrelevant information, though 鈥� and this tendency may be a factor driving current market volatility.
Economists use the term 鈥渟unspots鈥� to refer to news or events that really shouldn鈥檛 move markets but can if enough people believe they will. The name comes from a claim in the 1870s by English economist William Stanley Jevons that sunspot activity might be the cause of economic cycles.
快猫短视频paper articles can be sunspots. 鈥�The Wall Street Journal might report that some company鈥檚 stock has taken such a beating that it is poised for a turnaround,鈥� says economist John Duffy of the University of Pittsburgh. 鈥淭his is typically just speculation. Yet if people act on the prediction, it can become self-fulfilling.鈥�
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Distinguishing sunspots from 鈥渞eal鈥� news is next to impossible, says Duffy, not least because people disagree about what news actually matters. Indeed, he and economist Eric Fisher of the California Polytechnic State University in San Luis Obispo have demonstrated how reality can have very little to do with what actually happens in a market.
They set up an artificial market in which people could trade stock for real money. The researchers announced periodic price 鈥渇orecasts鈥� that were based on nothing more than flipping a coin, yet people began to act on them, with the result that the market ended up following the forecasts. 鈥淲hen information is hard to find,鈥� says Fisher, 鈥減eople look to outside events, even random events, to form their expectations.鈥�
This tendency might reflect a need to find meaning when we feel out of control. Jennifer Whitson of the University of Texas at Austin and Adam Galinsky of Northwestern University in Evanston, Illinois, found that people conditioned to feel out of control were more likely to see illusory patterns in collections of figures such as stock market data (Science, vol 322, p 115). Fisher suggests this trait may be implicated in market turbulence.
Calming the markets right now is as much art as science, especially for public officials, but it seems the message for politicians is to be vague in their speculations, unless they intend to try and steer the market. 鈥淚f officials say a lot of mumbo-jumbo,鈥� says Fisher, 鈥渢hen no one knows how to act on their pronouncements.鈥�
