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MENTAL MODEL · M1022

Buy the Rumor, Sell the News

Buy the Rumor, Sell the News
DecidemediumGame Theory
Included
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

Market prices reflect expectations. When good news is still in the rumor stage, prices rise (expectations are realized); when the good news is officially announced, prices instead fall (good news exhausted, profit-taking).

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Expectation stripping. When everyone knows a 'big positive' is happening, don't rush in. At that point, only 'bag holders' remain. Value lies in the asymmetric information stage.

anchor

Anchor fast decisions

Buy in the expectation stage, sell when the fact is realized. Because 'buy the rumor, sell the news', prices have already reflected the event before it happens, and often fall afterward.

MINIMUM ACTION

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Source support: Explicit

  • link
    investopedia.comhttps://www.investopedia.com/terms/n/news-trader.aspZH · Explicit
    verified

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