"Buy on the rumor, sell on the news” is a Wall Street proverb that dates at least to the 1950s. A slight variation—“Buy on the rumor, sell on the fact”—is cited in print from the 1970s.
If, for example, there’s a rumor that a stock will split or announce a large dividend, this adage states that buying the stock is in order. When that “rumor” becomes “news” or “fact,” the stock price usually goes up and it is time to sell.
28 August 1935, Titusville (PA) Herald, pg. 7, col. 5:
Brokers see Wall Street adage, “sell on the good news.”
13 December 1956, New York (NY) Times, “Stocks Retreat Third Day in Row,” pg. 59:
In the Bethlehem-Youngstown situation, Wall Street held to its old apothegm, “Buy on the rumor, sell on the news.” This expresses the observed fact that stocks involved in merger negotiations do considerably better than the market as a whole between the time the merger is first rumored and the time the companies announce it, considerably worse between the announcement and the consummation.
24 March 1957, New York (NY) Times, “Prices Anticipate Splits of Shares” by Burton Crane, pg. 163:
Wall Street has an adage, “Buy on the rumor; sell on the news.” Statistics now demonstrate that it is solidly grounded.
An examination has been made of the forty-three companies that have announced splits or 100 per cent stock dividends since the end of last June. Of these, fourteen have not yet held shareholders’ meetings to ratify their decisions and one has voted the split but has not yet made it. The figures of the remaining twenty-eight have been examined.
The results show that almost all the market gains were made in the three months before the directors announced a proposal to split. In that period twenty-three of the twenty-eight stocks advanced, four receded and one ended unchanged.
From the directors’ announcement to a period three months after the shareholders’ meeting, only ten of the stocks showed gains. The other eighteen declined.
17 April 1957, New York (NY) Times, “Dividend Is Up, Stock Down,” pg. 56:
Those Wall Streeters who say “Buy on the rumor and sell on the news” found another confirmation yesterday.
30 April 1957, New York (NY) Times, “Modest Rise Led By Steel Shares,” pg. 51:
The old saying “buy on the rumor, sell on the news” found new illustrations yesterday.
25 August 1961, New York (NY) Times, “Market Declines as Volume Falls” by Richard Rutter, pg. 34:
Another confirmation of the old adage that “Wall Street sells on the news”—and buys on the rumor.
11 January 1962, Winnipeg (Manitoba, Canada) Free Press, pg. 22, col. 4:
It trimmed part of this loss later, but closed with a $4 decline at $110.75 in a classic example of the old Wall Street precept that traders “buy on the rumor and sell on the news.”
By Elmo Bryant Phillips and Sylvia Lane
Published by Wiley
Buy on the rumor, sell on the fact.
Stock Exchange adage
17 December 1967, New York (NY) Times, “Output Is Heavy at Rumor Mills” by John J. Abele, pg. 144:
In many cases, anticipation of the news was more profitable than the news itself, a reflection of Street’s hoary cliche, “Buy on the rumors, sell on the news.”
17 December 1972, Dallas (TX) Morning News, section B, pg. 16:
There is a stock market axiom “buy on the rumor and sell on the news.”
15 July 1975, New York (NY) Times, “Grain and Soybean prices Drop” by Elizabeth M. Fowler, pg. 50:
“There’s an old saying, ‘buy on the rumor, sell on the fact’.”
22 October 1975, New York (NY) Times, “Farmers Score Soviet Grain Pact” by William Robbins, pg. 71:
The professionals generally follow the rule of “Buy on the rumor, sell on the news.”
Wall Street on a shoestring
By Antony Rodolakis
Published by Reston Pub. Co.
DON’T BUY ON THE RUMOR AND SELL ON THE NEWS
There are many platitudes that pass for stock market wisdom, but “Buy on the rumor, sell on the news” is one of ...
A Complete Guide to the Futures Markets:
Fundamental Analysis, Technical Analysis, Trading, Spreads, and Options
By Jack D. Schwager
Hoboken, NJ: John Wiley and Sons
Ironically, the price reversal materialized just when initial production estimates for the new season emphatically substantiated earlier pessimistic crop expectations — a classic example of “buy the rumor, sell the news.”
Stock Market Rules:
70 of the Most Widely Held Investment Axioms Explained, Examined, and Exposed
By Michael D. Sheimo
Published by McGraw-Hill Professional
Buy on the Rumor, Sell on the News
An old saying that usually accompanies the buy high-sell higher strategy is to “buy on the rumor, sell on the news.”
New York City • Banking/Finance/Insurance • (0) Comments • Tuesday, October 14, 2008 • Permalink