{"id":2459,"date":"2025-09-06T03:29:11","date_gmt":"2025-09-06T03:29:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/2459\/"},"modified":"2025-09-06T03:29:11","modified_gmt":"2025-09-06T03:29:11","slug":"do-small-changes-in-the-stock-market-matter","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/2459\/","title":{"rendered":"Do small changes in the stock market matter?"},"content":{"rendered":"

This is just one of the stories from our \u201cI\u2019ve Always Wondered\u201d series, where we tackle all of your questions about the world of business, no matter how big or small. Ever wondered if recycling is\u00a0worth it<\/a>? Or how store brands\u00a0stack up against<\/a>\u00a0name brands? Check out more from the series\u00a0here<\/a>.<\/p>\n

Listener Jean Murray asks:<\/p>\n

You report changes in the stock market that are tenths of a percent. As a physical scientist, changes on this order are not typically significant; we call them noise. Is a change of a tenth of a percent in a company\u2019s stock really significant or might it lead to unnecessary alarm?<\/p>\n

If you hear that stock prices are down a tenth of a percent, there\u2019s no need to panic.\u00a0<\/p>\n

\u201cA tenth of a percent is basically noise because nobody really knows what a stock is worth,\u201d said Jim Angel, a finance professor at Georgetown University.\u00a0<\/p>\n

A stock\u2019s value is based on how much money a company is going to make in the future. And since no one can predict the future, stock prices are actually \u201cguesstimates,\u201d Angel said.\u00a0<\/p>\n

If a stock moves down a tiny fraction, that could have happened because someone needed to make a down payment on a house, so they sold some stock, Angel said.\u00a0<\/p>\n

\u201cPeople change their minds often and the consensus of the market can radically revalue a stock in moments,\u201d Angel said. \u201cCompany struck a gold mine, it jumps up. Oops, it’s not a gold mine, it crashes. For that reason, markets have always been volatile.\u201d\u00a0<\/p>\n

So why bother to report these changes at all?\u00a0<\/p>\n

\u201cOne, reporting things to a tenth of a percent sounds precise. It sounds more authoritative,\u201d Angel said. \u201cThe other thing is people are expecting news about the market.\u201d\u00a0<\/p>\n

T. Clifton Green, a finance professor at Emory University, compared market reporting to sports analysis.\u00a0<\/p>\n

\u201cWe don’t begrudge sports writers from talking about their sports teams, and how the team is doing and how the running back\u2019s health is. That\u2019s just one signal among many about how the sports team is going to do, and so we wouldn’t argue that they should write less about the team,\u201d Green said. \u201cSo in that regard, we don’t fault people for writing about the stock market.\u201d\u00a0<\/p>\n

Green said he isn\u2019t against reports that note whether or not the stock market went down a tenth of a percent that day because that percentage change wouldn\u2019t influence his investing strategies.\u00a0<\/p>\n

People should think long term about their risk appetite and liquidity needs when they\u2019re investing, Green said.\u00a0<\/p>\n

\u201cIs it a good strategy to be looking at your portfolio every single day or every hour? Oh, it is not,\u201d Green said.\u00a0<\/p>\n

The markets are only slightly more likely to go up on an average day than down, Green pointed out.<\/p>\n

\u201cSmall losses make us more unhappy than small gains make us happy. And so if you watch every day, it’s going to tend to make you more unhappy than happy,\u201d Green said.\u00a0<\/p>\n

But Green said that small daily changes do add up in the long term. If stock returns are 10% per year, then over the course of a year, that translates to a return of less than one-tenth of a percent per day, he pointed out.\u00a0<\/p>\n

Angel said he doesn\u2019t pay attention to common stocks that move less than 1%. But if we\u2019re talking about the market as a whole, then a shift of 0.25% to 0.5% can be revealing.\u00a0<\/p>\n

\u201cIt\u2019s usually a response to something happening in the world, whether it’s speculation about how much money the Fed is going to print, or what’s going to happen to tariff policy,\u201d Angel said.<\/p>\n

Related Topics<\/p>\n","protected":false},"excerpt":{"rendered":"This is just one of the stories from our \u201cI\u2019ve Always Wondered\u201d series, where we tackle all of…\n","protected":false},"author":2,"featured_media":2460,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[72,61,1831,60,123,2234,2990],"class_list":["post-2459","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-ie","tag-investing","tag-ireland","tag-markets","tag-stock-market","tag-stock-traders"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/2459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=2459"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/2459\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/2460"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=2459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=2459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=2459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}