Research and Trading
Traders Magazine, November 2003
Research conclusions are making stocks more volatile. This means it is now more difficult to trade intelligently. The two major trends in the relationship between research and trading are: 1. The increased anticipation of coming events and their potential stock impact. 2. The repackaging and delivery of research specifically for traders. Indeed, research and trading are becoming much more intertwined. With the largest stocks, there isn't much advantage in traditional research. The trading patterns and longer-term price action in stocks like GE and Cisco, for instance, have more to do with the economy, the market and investor sentiment than fundamental knowledge and analysis. However, companies in the Russell 2000 are another matter. They demand expertise in a number of areas, including research.