Now or Never

Accounting assess the past, while stocks predict the future. The stock marketing acts as a crystal ball of the corresponding firm’s distant future, and they often often portray an accurate picture of the company due the self-prophecy effect.

Self-prophecy occurs when expectation regarding an event actually becomes true due to the situations created after the announcing of the expectations. If news regarding a stock suggests that it is bullish and will rise, then upon hearing the news, people try to take advantage of the current price by buying increasing amounts of the hot stock. As a result, the demand rises, pushing the price up like what is expected. When news predicts the plummet of a stock, people start to panic, and sell their shares. This drops the demand and adds to the supplies of the stocks, reducing its price accordingly to the laws of supply and demand, and thus, it fulfills the prediction once again.

Stocks, flowing with news, fulfills certain prophesies and predictions even if these were mere speculations and rumours. Therefore, what is predicted can certainly affect the future price of the stocks and in turn the firm, giving stocks to ability to foresee the future.

Source: http://ownthedollar.com/2009/12/beware-stock-market-selffulfilling-prophecy/

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