The market is always weighting different factors differently, this leads to volatility of stock prices

The markets are a curious place because pricing at different points in time are dominated by different factors. Often macro factors dominate over sector and company specific issues. This results in higher correlation between stock prices in different sectors. Sometimes the market over emphasises quarterly results, meaning an up or down surprise can lead to violent changes in stock prices. Some investors spend considerable time understanding the mood of the market and understanding quantitatively what factors it is focusing on. I dont do that because this takes considerable time and does not suggest a clear cut investment as an output. Instead we focus on businesses we understand, and appreciate in a qualitative manner when the market mood is different by the way it values the same businesses differently. This can provide opportunity. We often find unlucky or lucky timing of events can pay a large role in market pricing. A large acquisition that perhaps was expensive can lead to the stock price of the company declining. A bad patch in the market can then exacerbate this decline followed by a bad sector issue can lead to carnage on the stock price of a company that was initially driven by a company specific event and then taken further down with market and sector issues. This can lead to mis pricing due to herd behaviour. It should be noted with ETFs taking greater market share of stock market volume this pricing momentum may increase.