Why markets behave the way they behave?

It is noteworthy that in any given calendar year, the markets are subjected to multiple knee jerk reactions. Funnily enough, people are aware about the possible consequences when such a causal news or event spreads before the market hours. However, once the market opens and takes the blow, a relief rally follows in a session or two. Take for example, the case of Brexit, Chinese devaluation, Trump win, etc. In all these cases, the markets had encountered a serious blow on the day of the event and had pared all the losses by the next few sessions to reach pre-jitter levels or in some cases a higher one. Ironically, people tend to lose money on these knee jerk reactions when they should have gained had they monitored global events on a continuous basis. Predicting these events is not important-- understanding the causality is. Because that will help differentiate between a true knee jerk reaction and a sustained fall.

Submitted November 10, 2016 at 04:59AM by tbelknap https://www.reddit.com/r/StockMarket/comments/5c73ej/why_markets_behave_the_way_they_behave/?utm_source=ifttt