Buy The Rumor, Sell The Fact

Investors often look for an indication of what companies or central banks are likely to say before their official statements. These “rumors” can have an effect on the prices of assets as investors “buy” into them. When the actual announcement is made – i.e. the “facts” are out – investors who were right, having bought in ahead of any news may “sell” and take profits from any upwards price moves in the run-up to the release – hoping that other investors who’d also seen the news but not bought would be encouraged to buy as earlier investors sell.