Individual Stocks

Understanding Financial Markets

How can I misinterpret an indicator?

When a report is released, it is naturally scrutinized and judged by all who read it. Some investment managers and individuals may review the same figures and draw completely different conclusions, based upon their own biases, trading rules, theories, or bets. A great example is the Quit Rate, or how many people voluntarily give up their jobs. On the surface, an increase in this rate—issued by the Bureau of Labor Statistics, and analyzed by dozens of other organizations—may appear bad, as more people may become unemployed. But it may also indicate some type of economic turnaround is occurring, as people may have more confidence in the economy to leave a job voluntarily in order to find another job. Although there is only one number released, it may be interpreted in many different ways.


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