Imagine two friends, Jacob and Laura, standing at a crossroads in their investing journey.
Jacob has his eyes glued to breaking news headlines, ready to buy or sell at the slightest hint of excitement or fear.
Laura, on the other hand, pores over company reports, focusing on earnings, products, and long-term trends.
Their paths capture a timeless tug-of-war in the stock market: short-term news-driven volatility vs long-term fundamental value.
This story has played out repeatedly—from the dot-com bubble of the late 1990s to the meme stock mania of 2021—teaching investors old and new invaluable lessons.
In this over 6,000-word piece (with sources), I’ll explore how sensational news and solid fundamentals each sway stock prices, weaving through real-world case studies like Tesla’s wild ride, GameStop’s roller coaster, the cautionary tale of Enron, and Apple’s triumphant turnaround.
Along the way, we’ll delve into investor psychology – herd mentality, market sentiment, and the fear and greed that drive decision-making – and compare how different market cycles (the dot-com crash, 2008 crisis, COVID-19 pandemic, and more) tested the resolve of news-chasers and fundamental-focused investors alike.
By the end, we’ll distill what all these episodes mean for everyday investors trying to decide what really matters in the long run.
Learn How to Spot the Real Winners Amid the Hype:
Keep reading with a 7-day free trial
Subscribe to The Stock Insider to keep reading this post and get 7 days of free access to the full post archives.