I don’t understand this market

Let me explain simply how this stock market works. If there is good news, stocks should go up because things look better going forward. Pretty straightforward.

If there is bad news, stocks should also go up. Bad news means things may get worse, so the Fed and other government institutions will act to make things not get worse. Pretty straightforward.

When it comes to specific companies, you want to buy when they start rehiring people. That means demand for their product/service is going up, which is a good thing. When a company announces layoffs, you also want to buy, because it means they're lowering their expenses.

To sum things up, you want to buy on good news because it means things are getting better in the near future. You also want to buy on bad news because it means things can potentially get better in the not-so-near future.

/r/investing Thread