Another instance of the old stock market axiom — buy on the rumor, sell on the news.
Look, for instance, at what happened to the auto stocks today. Ford was as low as $2.12 a share in the opening moments of trading, but as news spread that the bailout might still happen, it rocketed upward, and at one point it reached $3.21. In other words, it rose forty-five per cent in a couple of hours. G.M. needs the government’s money more than Ford does, and so its upward spurt was even more impressive: after being as low as $2.66, its shares reached $4.23. That’s a sixty per cent move. It’s simply implausible to believe that this would have happened if investors were not expecting some form of government intervention.