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Guess what I just heard

Guess what I just heard
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First Published: Thu, Jul 17 2008. 12 18 AM IST
Updated: Thu, Jul 17 2008. 12 18 AM IST
Remember the old advice on how to make a quick buck in the stock market — buy on the rumour and sell on the news. Many seem to believe that the power of the well-targeted rumour to move markets has dissipated in the West. Now, it is only in markets such as India that shady operators can profit from rumours.
We have company. The US Securities and Exchange Commission has gone into battle against traders who float rumours and then profit from them. There are many who believe that Bear Stearns was packed off into bankruptcy and Lehman Brothers brought to its knees by such wildfire rumours.
This is an old game, and one brilliantly told in books such as Reminiscences of a Stock Operator, a rollicking autobiographical account of Wall Street in the 1920s, by Edwin LeFevre.
It is hard to understand how regulators will be able to distinguish between the stories that are spread by stock market operators and the harmless tittle-tattle that swirls through markets in the normal course of the day. That said, investors should learn not to jump around with every rumour heard on the street — and in the media.
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First Published: Thu, Jul 17 2008. 12 18 AM IST