From MoneyWeek · · 1m 10s
Good news vs. share price
How good news affects stock prices depends on what you pay for the shares.
In brief
How good news affects stock prices depends on what you pay for the shares. Good news makes shares rise, but only if you don't overpay for them. Originally reported by MoneyWeek.
Investor survey shows hope
82% of British adults expected shares to rise after good news.
Academics disagree
Two-thirds of finance researchers said the news would not affect returns.
Why the price matters
People focus on company prospects, not share price when deciding investments.
Price change effect
Shares rose 14% after news, but 70% still expected better returns.
Counting shares shows value
Spelling out share counts helped 49% expect better returns.
Real-world example
With £1,100, you buy 250 shares at 440p vs. 275 before the news.
Market reaction timeline
Shares rose 0.68% in first ten days after good news, then 0.71% after 60 days.
Stamp duty cost
Stamp duty takes 0.5% of investment in most uk shares.
The key insight
Good news is a good share only if you don't overpay for it.
Here's the gist
Good news makes shares rise, but only if you don't overpay for them.
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