When I was taught the "scientific method" long ago, I recall the arduous process of moving an idea from hypothesis to theory to principle. While I don't have time to go through that lengthy process, I do have a hypothesis.
While the stock market invariably over-reacts, it over-reacts to different news, depending on where it is in the cycle. During bear markets, the stock market largely ignores political news and over-reacts to economic news. During bull markets, it largely ignores economic news and over-reacts to political news.
During bear markets, politicians can't do as much damage to the stock market as they can during a bull market. Conversely, economic data is considered less of a risk during a bull market, leaving politicians as the primary risk factor.
Another distinction is that economic data can predict the future, while politicians cling to the past.
While the stock market invariably over-reacts, it over-reacts to different news, depending on where it is in the cycle. During bear markets, the stock market largely ignores political news and over-reacts to economic news. During bull markets, it largely ignores economic news and over-reacts to political news.
During bear markets, politicians can't do as much damage to the stock market as they can during a bull market. Conversely, economic data is considered less of a risk during a bull market, leaving politicians as the primary risk factor.
Another distinction is that economic data can predict the future, while politicians cling to the past.
