Concussions and Stock Markets

Unfortunately, I've recently witnessed my lovely, ski-racing daughter go through a concussion. The experience is terrifying for us parents! She's going to be fine, but it's not pleasant to watch someone you love experience dizzy spells and short-term memory loss.
 
This dizzying, short-term memory-loss stock market is not nearly as disturbing. Even with the millions of dollars we have invested in it, the market is acting normal. As I've said many times, if you're watching the news to find out what's going on in the stock market, you're missing the point. 
 
The news media will not tell you what's going on, they'll sell you what is scary.

What's driving the market? A major theme that our analysts at Litman Gregory say will likely last longer than any of us think, is the easy money policies of many countries in the world. Interest rates, in as much as they can be controlled by any force, will remain lower longer than we may think possible. The recent turbulence in the market is below normal--not above it.  In fact, the amount of instant information we have access to is above normal. I believe that, over time, we will treat the financial news media as noise because, largely, it is. 

 

Look at the following chart which measures risk--or bounciness--in the market. It's low compared to where it has been.  

 

 http://stockcharts.com/h-sc/ui?s=$VIX&p=W&b=5&g=0&id=p58134206140  

 

On the other hand, we don't just trust any one analyst team for our investments. Our equity research partner, Athena Invest, will quickly and accurately, tell you: 

 

The Fed does not control interest rates. Markets control interest rates.  

 

And the market often moves quickly and irrationally. Thus, in spite of all the folks lining up on the side of the table that says interest rates are likely to be lower rather than higher, things can change quickly, and may change this year.

If these topics are of interest (pun intended) to you, then perhaps you want to join us for our Lunch and Learn event, Making Sense of the Markets, on April 24th at 11:30. Due to the incredible popularity of our events, and due to the size restrictions of our office (which, normally, feels quite large!), we have a firm cap on the number of folks who can attend. So RSVP soon! 

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