Buy the rumor, sell the news (소문에 사고, 뉴스에 팔아라)

"Buy the rumor, sell the news" is a common phrase in the financial and trading worlds. It refers to a market strategy where traders and investors buy stocks or other assets based on rumors or speculation about future announcements or developments. These rumors can involve earnings reports, product launches, regulatory changes, or any other news that could impact a company's value. The idea is to capitalize on the price movement that occurs as the rumor circulates and anticipation builds.

 

 

Once the actual news is released, regardless of whether it confirms or denies the speculation, there's often a sharp reaction in the market. This reaction could be a rapid increase or decrease in the asset's price. The "sell the news" part of the phrase suggests that once the actual news is public, the opportunity for profit based on the speculation has passed, and it might be time to sell and lock in any gains. This is because market expectations often get baked into prices before the actual news comes out, and the actual announcement can lead to a "buy the expectation, sell the fact" scenario, where prices adjust after the anticipation is either met or unmet.

This strategy is risky and based on speculation. It requires timing the market accurately, which is challenging and can lead to losses as well as gains. The effectiveness of this strategy can depend on various factors, including the nature of the news, market sentiment, and overall economic conditions.