There is nothing like a good routine. Mow the lawn on Thursdays. Church on Sundays. Work and school routines Monday through Friday. Get a haircut every 5 weeks (I know, I stretch it). Take dogs to groomers every 3 weeks. Mulch in the Spring. Over seed in the Fall. And it goes on and on. Everyone has a little different set of routines, but a lot are similar. But in a way, routines are comforting even if we don’t like doing the activity.
Investing has its’ routines too. I have learned my routines along the way. Since 2008 and iPhones, the first thing I look at when I wake are the futures. The market has routines with quarterly earnings, Federal Reserve Meetings, and economic data releases. They repeat over and over, providing information the market feeds upon and depends on for direction and even stability. As an example of when there is a gap in routine; the few weeks before earnings start being announced, there is a news vacuum and the market tends to be a little more volatile.
Randomness is not appreciated on Wall Street. The market tends not to like unexpected events like credit crisis, pandemics, war, trade tariffs, violence, protests, and tragic accidents. The interesting thing is the effects of unexpected events seem to be shortening. The reasons could be a variety of factors, but I will suggest two that seem most obvious. There are likely more, but these two jump out at me.
News flow is quicker and expansive. As an example of the abundance of news available, Google News aggregates news from over 50,000 sources on a daily basis according to Wikipedia (en.wikipedia.org/wiki/Google_News) that Google Gemini cited when asked. The sheer number of news pieces dilutes the impact and importance of any one piece. It has been argued a shorter attention span has resulted in the population “moving on” as the news flow never stops. So the non-stop news flow and our attention spans for news impact seem to be one factor.
Central Banks have gotten really good at addressing random events and crises, quickening the calming of the markets. Events do not get a chance to linger and fester. With the 2023 bank crisis, it happened on a Friday and over the weekend they came out with a series of programs to smooth things over. So the increase proactive activities of Central Banks seem to be another factor shortening the time a random event has in the market.
The combination of our collective short term memories being deluged with massive news flow and Central Banks skill at responding quickly to things has made random events mean less and have shorter impact times on market action.
Could there be events in the future that last longer once again? Of course there could. My simple observations are things have changed from how things were in the past in terms of size of news flow and Central Bank reaction times. In the end, humans seem to be comforted by routine and are bothered by randomness and this will stay constant.