Why stocks go up on bad news #
Posted Thursday 11th December 2008 09:41 GMT
It's called insider trading. The word leaks out in advance of the announcement; insiders sell or short-sell their stock, driving down the price. Then when it's announced, they buy stock back at a lower price, from the people who only found out about it. Works the same way on good news -- the stock rises before the news is announced, then drops as those who bought the stock sell it to those who just found out. I noticed this happening to Sun stock a lot in the '90s.


