Prof Damodaran discusses market triggers, and why these seemingly arbitrary numbers are deemed significant indicators or milestones by investors
In Damodaran's words:
What's so special about a trillion dollars (as opposed to $999.99 billion) market capitalization? More generally, why do investors attach significance to some numbers (including 52-week highs and lows, support & resistance lines)? Collectively, I title these sometimes arbitrary and sometimes reasoned-through numbers as "market triggers" and examine whether and why they matter. While value investors are often told to ignore these triggers as distractions, I argue that these triggers can sometimes have value effects and often can operate as catalysts causing the gap between price and value to close. Incorporating these triggers into the investment process can improve it.