“On October 3rd he asked me what day it is” and I said it is October 3rd. Happy Mean Girls Day, and what better way to celebrate than to explain how the stock market is similar to a bunch of mean girls. Yes, you read that right, I promise you will think it is so “fetch”.
Lets start with the simple theory of supply and demand. Now the more demand than the less supply, therefore meaning something is more valuable, and the more supply and less demand, than that mean something is less valuable. Relate this to the market, than the more demand of stock the higher the price of the stock is; because investors are constantly buying it. Now, with the market there are a lot of external factors to consider such as how much money the company made, or what new products the company is releasing, in a sense rumors.
Remember in Mean Girls, how far rumors can carry, and how much they can destroy or build someone? Just as rumors did for Gretchen, Regina, Cady, and Karen. Unlike in high school where the topics consisted of who is getting fat, or who kissed whom? The markets rumors are about new products, or how much profit X Company will make, or even scandals! Now, there aren’t a bunch of mean girls walking around the stock floor of the New York Stock Exchange, but there is tons business professional who fall victim to what I like to call stock drama which turns them into mean girls.
What is stock drama? Well, it is a term I coined to describe the ups and down of a stock based on rumors that are spread by investors and media. Investors can downgrade or upgrade a stock and say it is promising or not and just like that the stock can go up or down. Now you do not want to be on these investors bad side, these are typically influencer investors like Warren Buffet or rating systems like Motley Fool, just like you did not want to make it in the Regina’s burn book, you don’t want to be downgraded by Motley Fool or others in that circle.
Rumors of product releases often influence a stock as well. Take Apple, GoPro or even Nike who is releasing their new self-lace Back To The Future shoes tomorrow. The smallest of rumors can boost or drop a stock if it gets enough traction. Investors act on these rumors, often to get ahead of the competition and stocks can waiver because of it. Tesla for example, experienced a drop when the rumor of some miss accounting with their acquisition of Solar City, and when the rumor became true, the stock tumbled even more. Investors always have their ears perked up waiting to get any information they can take to get a leg up on their competition and some even spread rumors to see who will act on them. It is like in high school, when you are always waiting to here the juicy gossip but unlike a person the juicy gossip here is about a company. It is up to you to act on the rumors if you want or wait until there is solid proof to back up the information.
So happy Mean Girls Day and don’t forget that if you ever want to watch some stock drama unfold, just wait to see a rumor and watch what happens to the demand of a stock that day, and remember we wear pink on Wednesdays.