How the stock market works
"Company X crushes estimates; Shares Soar" screams the headlines in Forbes , a respected business magazine. "Company X profits slip 35% as spending continues" proclaims the equally loud headlines of The Wall Street Journal , a respectable business newspaper. Both refer to the same company - Amazon - and the same piece of news, the first quarter results of the company. Flummoxed ?? Read on. Can both headlines be right ?? Surely they can't. Only in the rarified world of finance , especially the even more ionospheric world of stock markets can both statements be true. Yes. You see, company performance and movement of share prices is based on "expectations" and not on reality. Expectations of whom, you may ask ? Of a unique sub species of the human race called homo sapiens analystensis (hereinafter referred to as HSA). Cut to business school. Some of the best brains in the land want to "go into finance" after they graduate. Their ambition is ...