“Wall Street never discounts the same thing twice”

“Wall Street never discounts the same thing twice” is a stock exchange adage cited since at least the early 1930s. For example, it could be expected that a company is going to announce that earnings haven’t met expectations. When that announcement is formally made, the company’s stock might not go down because investors were already expecting poor results and don’t “discount twice” on the same news.
 
(The 1961 citation below offers a different opinion on the value of this adage.)
 
 
8 December 1932, New York (NY) Times, “Topics in Wall Street,” pg. 31:
Discounting Congress.
Wall Street’s tendency to look for constructive legislation, or at least little harmful legislation, from the short session of the Seventy-second Congress contrasts sharply with the fears which the financial district entertained during the last session of Congress. One broker recalled the adage yesterday that “Wall Street never discounts the same thing twice.” The Seventy-second Congress was discounted by the stock market last Spring, he declared, so that many speculators feel that in the next few months there is little to fear from the legislative branch of the government.
 
28 November 1933, Chester (PA) Times, “Timely Financial Gossip” by Elmer C. Walzer, pg. 2, col. 3:
Wall Street is favorably impressed with the tendency of the business indices. More attention is being paid to those items daily, and if the trend continues upward, the market should profit. It is said in the street the market never discounts the same thing twice. It discounted inflation last spring and summer and the next real impetus for an advance, it is slated, must come from real business improvement.
 
Google Books
The Theory of Investment Value
By John Burr Williams
Cambridge, MA: Harvard University Press
1938
Pg. 104:
They cannot discount the same event twice.
 
1 January 1956, New York (NY) Times, “Six Expert Minds, Six Views on 1956 Market” by Burton Crane, pg. F1:
The market already knows that 1956 business will be good, so it will be paying attention to other matters, mostly political. But if the President decides not to run again, the sell-off will not be important, because Wall Street never discounts the same thing twice.
 
14 November 1961, Syracuse (NY) Post-Standard, “Market May Discount Same News Twice” by William A. Doyle, pg. 17, col. 1:
Q. There is an adage that “the market never discounts the same news twice.” Then, what happened to McNeil Machine & Engineering? A number of brokerage houses wrote very favorable reports about this company. All these reports stated the company would show lower earnings this year than in 1960 but that its growth pattern would resume in the future.
 
I bought 100 shares of this stock at $43 a share. The stock had been higher earlier this year. Then, the earning report was published and the stock went way down—again. How can this happen?

 
A. My dictionary defines adage as “a saying, saw, maxim, proverb or motto which has obtained credit through long use.’ But, it does not state that all adages are reliable.
 
Many adages have been coined in the financial district. They make interesting conversation or reading. But, very often, they backfire. You found that out.
 
The adage you quote means simply that the price of stocks in general or one stock in particular is supposed to respond to a certain bit of news only once.
 
In the case of McNeil Machine & Engineering, the word got around that the company’s profits this year are not expected to be as high as they were last year. This information wasn’t exactly a secret.
 
This took some of the bloom of popularity away from the company’s stock. As a result, the stock’s market price slipped a bit. it had sold as high as $47 a share earlier this year.
 
In the terminology of the world of finance, “the market was discounting the news” of lower earnings, even before the news was officially announced. THe market price of McNeil Machine & Engineering stock continued to decline after you bought at $43 a share.
 
Then, when the earnings for the six months ended June 30 were announced, the price of the stock dipped some more. Those earnings, equal to $1.31 a share for the six months, were evidently lower than many people had expected.
 
You see, no matter what your adage says, the market can discount the same news twice. The market price of this stock droopped as low as $30 a share. It has since recovered some of that loss. It is still considered a long-term growth situation.
 
But this should teach you not to put your faith (and your money) into “adages.”
   
Google Books
The Bolton-Tremblay Bank Credit Analyst: Stock Market and Business Forecast
edited by Arthur Hamilton Bolton
Published by Monetary Research.
1962
Item notes: v.14-15 (July 1962-June 1963)
Pg. 5:
It is an axiom of market folklore that the market will not discount the same thing twice.
 
14 January 1964, New York (NY) Times, “Cigarette Shares Close Mixed Despite U.S. Report on Smoking” by Vartanig G. Vartan, pg. 39:
Behind the stable market action of tobacco issues yesterday loomed two basic tenets: stocks often act better after the bad news is out and the market rarely discounts the same thing twice.
 
27 June 1964, New York (NY) Times, “Roaring of the Bulls Drowns the Cries From the Bears” by Robert Metz, pg. 33:
“However, I don’t think we can count on another Presidential market if Johnson is re-elected. THe market for the first four to six months this year came under tragic circumstances, but it was the type of market a new President gives us. If he is re-elected in November the question is whether the market will discount the same thing twice. it seldom does, so we’re not likely to get the kind of surge that follows a new President.”
(Monte Gordon, research partner in Bache & Co.—ed.)
 
21 January 1968, New York (NY) Times, “Public Steps Up In-and-Out Trading,” pg. F1:
However, Alfred F. Revson Jr., a partner in the Atlanta-based firm of Courts & Co., rejects the notion that summer troubles will hurt stock prices.
 
‘We’ve had riots before,” the broker stated. “The market doesn’t discount the same thing twice.”
   
22 December 1969, Washington (DC) Post, “Credit Restraints Likely to Ease Soon” by Harold B. Dorsey, pg. E7:
NEW YORK—There is an old adage in Wall Street to the effect that one should not expect the stock market to discount the same thing twice.
       
Las Vegas (NV) Sun
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(...)
These factors, however, are so well documented in Wall Street and Main Street that they are no longer news. An old saying is: “Wall Street never discounts the same thing twice.”
       
Google Books
Technical Analysis Explained:
The Successful Investor’s Guide to Spotting Investment Trends and Turning Points

By Martin J. Pring
Published by McGraw-Hill Professional
2002
Pg. 7:
Major Technical Principle
The market never discounts the same thing twice.
 
Seeking Alpha
5 Reasons Stocks Will Keep Falling
by: The Simplified Investor
October 10, 2008 | about stocks
(...)
willynill
Oct 10 09:56 AM
Markets are about the future. There is a saying in the stock market, “the market never discounts the same thing twice.” So the stock market is swooning now as the anticipation of an Obama presidency heightens (there is a high negative correlation between Obama’s poll numbers and the present stock market numbers). So if Obama is elected, the market won’t drop again. In other words, the stock market value today is the present value of future expectations. Future expectations are looking grim with an anti-capitalist government in the offing.
       
WSJ.com Forums
willynill
Posted: Wed Oct 29, 2008 8:08 am
Post subject: Re: The Markets Are Weak Because the Candidates Are Lousy
“The market never discounts the same thing twice”. There is a high negative correlation between Obama’s poll number changes and stock market changes; This means that if Obama wins the election, the market won’t drop again. But it may mean that if McCain wins, in a surprise that had not been discounted, the market would rise. This tells me that only one of the candidates is lousy.
 
Melvin D. Williams