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Finance a la shmoop what is a barometer you know in our financial sense well you

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know what a non-financial barometer is this thingy tracks the pressure in the [A barometer appears]

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air and more or less where the pressure goes well so goes the weather at 30 in

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change well it's likely that the weather is mild and sunny at 27 you're thinking

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about Dorothy and her little dog too... note that the barometers readings [Dorothy in a room and a witch appears by the window]

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aren't a guarantee of what the weather actually is or definitely will be the

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readings are just a "highly likely" indicator

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well financial barometers work the same way well you pick one slice of data to [One slice of pie on the floor]

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then represent a much broader slice that the whole financial world cares about

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like you could sample the performance on a given day of a dozen tech stocks if

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all of them went up two percent well it's likely that NASDAQ had an awesome

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up 2% day how can this kind of barometer be wrong well if the sample size or data [Tech stocks stamped poorly selected]

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mix was poorly selected then yeah the barometer could be really wrong like if

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you only picked as your sample for the barometer 12 small biotech company

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stocks on a day when the government mandated no taxes for companies in

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biotech under a hundred million dollars in revenue well on that day it's likely

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that the very highly weighted in the index large pharma companies actually [Share price of big pharma stocks graph]

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went down because now they as high tax payers have to compete with schools of

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small fish who are you know tax advantaged against them so then the

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index would go down even though those 12 bio stocks went up got it so that's a

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stock market barometer and there are other barometers like investors doing

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channel checks with large customers of search engine marketing companies to see

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how well Google is doing that quarter like what's their volume if volumes are

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really high Google stock probably go up

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That's a channel check or barometer for

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likely outcomes of Google stock price after the announcement of their earnings [Google stock price announced on newspaper]

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got it another barometer checking on the health

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of the economy well an investor might cruise through the job listing services

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on places like glass door or indeed note how many listings exist for

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plumbers, coders and shrimp de-veiners other barometers in the financial

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octagon include things like gross domestic product or GDP per capita...

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that's a barometer for how well or poorly the economy is swimming along and

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things like new housing starts yeah that's a barometer that's a commonly [Man discussing housing starts barometer]

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reported stat and it functions to give more lines on the barometer dial that

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they are mashed up with yet more data on things like on the current inflation

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rate and all kinds of other things including whether or not aliens land

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from Mars the before February is that a barometer must be a really powerful one...[alien spacecraft lands in city and man walks away]

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