Is financial market commentary off topic?

See this question.

When a stock price shifts suddenly there is probably some underlying reason, and frequently the price shift is the result of some new information - a technological breakthrough, a government deal, etc.

One might argue that in the answer "The company can expect higher profits from now on because of XY" the economic reasoning is all in the part before XY, therefore revealing XY is not really economics. (Unless XY itself is a complicated economic phenomenon, e.g., a change in market structure.)

One might also argue that economics based explanations are always/usually on-topic.

Are questions that ask for financial market commentary off-topic?

• Will accept the most upvoted answer on Aug 21. (Hopefully I will not forget.) – Giskard Aug 17 '20 at 9:49

Not sure if this is an answer, or another question. To the extent it is an answer, I argue that they are very rarely on topic.

What’s the value-added of answering a question as to why a particular share changed in price on a particular day? Will that answer ever be useful for anyone else in the future? Maybe a big financial market crash might be of future interest (or negative oil prices), but run-of-the-mill share volatility?

One can debate market efficiency, but it seems pretty safe to argue that there are no simple rules to predict market changes - otherwise, people would be using them to make big bucks. Given that backdrop, how can price changes be “explained”?

A related issue: there are dozens of questions being posted that are all of the same format “what did some random financial commentator mean by X?” Why would those questions ever be useful to future readers?

Update: Based on a comment by Giskard, I think the key criterion would be “of potential interest to future readers”. Vague, but it at least offers a guideline to people asking questions. Otherwise, questions are just being downvoted or closed on other grounds that are also being mis-applied.

• I like your argument about future uselessness of an explanation of a specific share movement. I am not sure if the same applies to “what did some random financial commentator mean by X?” because it could be a regular (but perhaps less well-known) use of X, and then the answer is useful to people googling X. – Giskard Aug 13 '20 at 17:26

I think there is also another issue which was not addressed by Brian's +1 answer and that is that save for some special circumstances any contemporary stock market commentary is highly opinion based.

For example, if tomorrow government announces some new Covid19 stimulus and stock market raises by $$3\%$$ how can anyone say what is the the reason why that happened without doing some empirical study about the event?

For all we know the $$3\%$$ increase might be just due to random variation. After all this is why in financial economics people always do event studies when they look whether the there really was significant change in abnormal returns.

Moreover, events often dont happen individually. Lets say that government again announces covid stimulus but this time stock market falls. Is it because the stimulus was signal the crisis is worse than people expected? Is it because the stimulus itself is not perceived credible because lets say there is an election coming up and some anti-stimulus candidate has high chances of winning and undoing it?

The problem is not that the questions would be inherently opinion based as there will be eventually some non-opinion based answer once someone actually puts an effort to research empirically the issue. Hence, for events that are not contemporary there actually might be some solid studies out there about their impact on stock market and hence the question might be answered in objective fashion. Therefore, we should probably not lump all of these questions into same category either and rather consider off topic commentary that is about unfolding events.

• "consider of topic" in the last line. Presumably you meant "consider off topic"? – Adam Bailey Aug 15 '20 at 10:34
• @AdamBailey yes sorry for that - I corrected it - my grammar is so terrible that the proofreading company on our university campus must be experiencing the biggest economic boom in their history since I entered graduate school :p – 1muflon1 Aug 15 '20 at 11:04

I believe that at some point the community decided that this site was to be primarily geared towards "academic economics" like that found in academic journals coming out of a research university (e.g. QJE or JPE), the federal reserve banks, or similar. Market commentary like the kind in the referenced question would never be published in these kinds of outlets. I would say the question is off-topic. I believe a good criterion would be to ask if the question is one that resembles this kind of research.

I'd argue that we want to encourage users that do this kind of work to join our community. One way to do that is to strictly disallow market commentary and other punditry like the one on the referenced question.