Stocks were found dead. But who’d done it? Sherlock Holmes was called in. He had four suspects, but he wasn’t sure which one was the culprit.
Was it fundamentals? “But surely they couldn’t have done it, Sherlock,” argued Watson. “They’re usually so timid: they seldom provide new insights, and in fact often consist of little more than anticipated earnings and analysts’ consensus.”
“That’s true,” replied Holmes, “but I’ve always looked suspiciously on fundamentals. There’s always a rumour that someone’s done all the work and come to this or that conclusion.”
What about a technical factor? “The sergeant says there was a lot of liquidity right up to the time that everyone wanted to sell,” said Watson. “Then, suddenly, it was gone. It simply vanished.”
Holmes lit his pipe. “A rumour is all it takes to suddenly make it disappear,” he replied. “I’ve always been a little worried about liquidity.”
Market sentiment? “It’s certainly never far away, is it Watson,” observed Holmes. “And it’s so unpredictable. A rumour’s all it takes to change it from a bull into a bear; before that, from bear to bull.”
Market commentators? “You know how they’ll say one thing and do another,” complained Watson. “Trouble is, most of the time it’s all based on half-backed theories, half-truths and innuendoes … rumour-mongers is what they are.”
“Still, you’re right not to trust them,” replied Homes. “I’m always suspicious of information and advice given in my best interest. But at least now we know who did it, Watson.”
“Who, Holmes,” asked a bewildered Watson. “Who?”
“Elementary, my dear Watson,” said Holmes. “What do we keep mentioning could have lain behind each of the four suspects? And, in each case, proved fatal? It’s obvious. We’ve seen it so often in the past, it’s bound to have been a …”
“Rumour,” exclaimed Watson.
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