Fear that he might decide to staunch the blossoming liquidity of the stock market by notching up interest rates drove traders into a frenzy of selling this morning. Try as they might, though, they could only manage to knock two to three percent off the major stock indices. Unfortunately for investors, the media jumped on these relatively minor price adjustments and made it the story du jour. One of the oddities of investing is the bizarre schizophrenia that divorces moves in the so-called market indices from their percentage context. Moves that probably would pass unnoticed in individual issues routinely invite the deepest of scrutiny if they occur on an index.
Wisdom loves to pin reasons on relatively insignificant percentage changes.
Finding a single unifying theme for millions of independent trades and distilling it to the masses would seem to be as easy as paying attention to the network news and reading a couple of newspapers. Not to mention, this particular morning Cisco was not an offender. One of the few perks in Greenspan's job must be that he can simply give a speech and let the media amplify his interest rate code. The guy asked how one could tell if the market was overvalued, and the next morning any index measuring the stock market is down one to three percent. Not a lot.