Two Reasons the Stock Market Is Really Different This Time
NEW YORK (TheStreet) -- Since the beginning of last year, the stock market has not followed any historical pattern, which may be frustrating to traders.
Consider the market this year. Many had expected that when the Federal Reserve began to scale back the pace of its bond purchases, riskier assets such as stocks would fall. Instead, the S&P 500 Index has been reaching all-time highs.
There are two reasons the market has been different this time around.
- Information Overflow
During the last few years, social media has disseminated information more widely and faster than ever before. Twitter and countless blogs are available 24/7 to anyone who has access to the Internet.Many of us bloggers repost the same things over and over written in a different way. These posts are no longer scarce information privy only to smart money, insiders or those who have put in countless hours of market study. For example, the record low VIX anomaly has become such a huge topic of discussion that it has gone mainstream and was recently featured on an NPR podcast called Planet Money that talks about economic issues in layman's terms for those not in finance-related fields. (VIX is a gauge of volatility in the market; low readings indicate a lack of fear among investors.) In years past, that type of information might have been known only to larger hedge funds, quantitative analysts and those with resources and statistical data not available to the average retail trader.
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