The Effect of News Events on the Market

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The Effect of News Events on the Market

Some charts of market averages list major news events that occurred at specific times during the last 12 months. This information can be extremely valuable, particularly if you retain and review old back copies. You then have a history over many years of the market averages, together with important news events that may have influenced the market's direction in the past.

History can repeat itself. If you have solid information about how markets behaved during certain past incidents, then you can develop better judgment for the future.

It is valuable to know, for example, how the market reacted in the past to a change of administration in Washington, rumors of war, wage and price controls, discount rate changes by the Federal Reserve Board, or "panic" news circumstances.

The chart on the next page of the general market averages shows several past cycles.