The Chicken or the Egg?

Which happens first? Do people become nervous about some macroeconomic fact (say interest rates) that they have heard news stories about, and then decide to sell their stock? Or do they react emotionally to a small movement in the market and reinforce it by selling their own stock – thereby starting a trend, which the media then justifies by finding an appropriate macroeconomic fact to serve as the basis for a news story?  In other words – are all those stories you hear on CNBC leading or trailing indicators? The financial press has a tremendous vested interest in saying that the information they deliver drives the markets. To see it from a different perspective, read the theories of Bob Prechter at elliotwave.com. His basic theory, which he calls socioeconomics, is that it is emotions – particularly crowd emotions – that move the market, and he has a lot of examples to back that up. Bear in mind that any time I make a market suggestion, it is almost guaranteed to be wrong (just ask my wife) and as I type this I can hear my partner Bob laughing at what a gullible idiot I am. But I’m not talking about the market,  I’m talking about the stories it generates, and how and when it generates them. I think socioeconomics has a lot to say about that, but then, I’ve always had a soft spot for science fiction too.  What do you think?