# Why does the Stock Market Surge when Obama hints at a new Treasury Secretary? **URL:** \ **Category:** Factual Questions\ **Created:** [November 21, 2008, 9:09pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907 "2008-11-21T21:09:28Z")\ **Posts on this page:** 7\ **Page:** 1
**Author:** ![Neutral\_Density](https://avatars.discourse-cdn.com/v4/letter/n/f4b2a3/32.png) [@Neutral\_Density](https://boards.straightdope.com/u/Neutral_Density)\ **Post date:** [November 21, 2008, 9:09pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/1 "2008-11-21T21:09:28Z")
Everyone knows that President-Elect Obama is putting together his Cabinet. Everyone knows that at some point he’ll name his Treasury Secretary. Why does the stock market react when a name is mentioned? Wouldn’t those in the stock market know that at some point it’s coming? Why would it surge 500 points? I don’t know much about the stock market, so perhaps it’s a dumb question. But please, fight ignorance. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [November 21, 2008, 9:19pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/2 "2008-11-21T21:19:29Z")
Correlation does not imply causation. Every day, your dumb-as-a-sack-of-doorknobs financial reporters look for some news story that appears even slightly correlated with that day’s trading, and announce “trading was [adjective] today as news of [random event] made investors [panicky|greedy|bargain-hunt|run-for-cover].” Also, they get a raise every time they use the word “rallied.” ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [November 21, 2008, 9:57pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/3 "2008-11-21T21:57:46Z")
Or, it could be that the market likes the idea of Tim Geithner (today’s rumored choice) as Treasury Secretary more than it would have liked if today’s rumor was, say, Dennis Kucinich. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [November 21, 2008, 10:14pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/4 "2008-11-21T22:14:42Z")
The market doesn’t like or dislike. The market does not think or have opinions. It is a fundamental mistake to anthropomorphize the actions of millions of independent people, all with their own objectives, opinions, analyses and irrationalities in such simple terms. That is why so much financial reporting is completely useless. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [November 21, 2008, 10:54pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/5 "2008-11-21T22:54:25Z")
If you present a set of common symptoms to ten doctors, you’ll get all ten giving you the identical diagnosis. If you present a set of common financial conditions to ten analysts, you’ll get all ten giving you identical explanations for the result. The stock market is comprised of millions of decisions, but a large percentages of those decisions are by a small set of very large investors, managing very large portfolios, with fairly similar investment goals and computer-driven investment decisions. Moreover, in this small community everybody knows everybody else and everybody talks to everybody else. There is no surprise or mystery to why the stock market moves in the way it does the vast majority of the time. kunilou has it correct. Obama has been rumored to be considering three or more names for the position. It’s hardly surprising that a person as close to the community as Geithner might be preferred over the others. It’s also true that if you give ten doctors extremely odd or uncommon symptoms, or you tell them that the commonest cause has already been ruled out, you get what they call a zebra case. (The saying is, In America if hear hoofbeats, think of horses not zebras.) In that event you may get ten different diagnoses, and none may be right. There are zebra days on Wall Street as well, when nobody knows what the hell is going on. Even so, when you walk into your doctor’s office, you expect to get the right diagnosis most of the time. In the same way, when you listen to the media tell you why the market responded as it did, you can expect it to be right most of the time. The world simply wouldn’t work otherwise. ---
**Author:** ![C\_K\_Dexter\_Haven](https://avatars.discourse-cdn.com/v4/letter/c/b2d939/32.png) [@C\_K\_Dexter\_Haven](https://boards.straightdope.com/u/C_K_Dexter_Haven)\ **Post date:** [November 21, 2008, 11:10pm UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/6 "2008-11-21T23:10:20Z")
What everyone has said is basically true. However, there is significant indication that investors do not like uncertainty. There tends to be a market surge whenever uncertainty is replaced by knowledge – such as immediately after a presidential election (regardless of which party wins), major appointments, etc. ---
**Author:** ![Crocodiles\_And\_Boulevards](https://avatars.discourse-cdn.com/v4/letter/c/ee7513/32.png) [@Crocodiles\_And\_Boulevards](https://boards.straightdope.com/u/Crocodiles_And_Boulevards)\ **Post date:** [November 23, 2008, 7:06am UTC](https://boards.straightdope.com/t/why-does-the-stock-market-surge-when-obama-hints-at-a-new-treasury-secretary/473907/7 "2008-11-23T07:06:47Z")
> [@C\_K\_Dexter\_Haven](#): > > What everyone has said is basically true. However, there is significant indication that investors do not like uncertainty. There tends to be a market surge whenever uncertainty is replaced by knowledge – such as immediately after a presidential election (regardless of which party wins), major appointments, etc. I suspect this is the case. A rallying market could just be all of those experts finally having some kind of data to work with. They see the nomination and think, “Oh, finally! Now we can start planning.” That may be a little overblown, though, considering we don’t know what the new Treasury Secretary will do.