Individual Stocks

Understanding Financial Markets

Why are these indicators so important to the general understanding of financial markets?

Indicators play a critical role in understanding what is happening in an economic system for a variety of reasons. If an economy is relatively transparent—if what is being reported actually did happen—at the most general level, we can observe what has just happened to the economy, and have more indications or proof as to what may happen next, an important factor when it comes to investing. But the assumption is that whatever investments we are tracking are in some way related or dependent on an economic indicator. Many money managers and investors react profoundly upon the release of some information, either by increasing positions in investments, selling positions in investments, or holding steady during the chaos created by the introduction of some indicative report.


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