“It was in the last place I looked” has always been a curious phrase to me. To my mind, it would be illogical to continue looking after you have found whatever it was that you were looking for. If you are of a similar mind then you will agree that if you are fortunate enough to find a lost thing, surely it will always be found in the last place you look. I mean, really, would you continue to look? Just to make sure?

What prompted my revisiting this was taking notice of the volatility of the markets in recent weeks. Actually, it would be more accurate to say the lack of volatility. Strangely, there is volatility all over the place…except in the place where you would normally think to find it.

This is a noteworthy thing especially when you compare it to some of the very dynamic — perhaps even irrational — whipsawing that we were seeing not that long ago. Normally, at least over broad periods of time, it is fairly easy to see the effect of economic or socio-political changes on the stock markets. And even short term events can cause big changes on ‘the Street’.

Indeed ‘the Street’ is frequently (and justifiably) accused of over-reacting to things that might become important. When it does that it will quickly move to correct its error…often resulting in even greater volatility. So, in the case of the markets we should understand that volatility is a measure of fear or complacency. Here then is the conundrum: in the first 100 or so days of the Trump administration there has been no shortage of drama, both domestically and across the world. Conversely, the markets have held to rather tight trading ranges and market volatility, as measured by the Volatility Index (VIX), has crept lower and lower. It is so low now that we have to reach back a long way in history to find comparative figures. Now, one would think that if high volatility is not a good thing then low volatility is a good thing. But, there are scenarios that would urge a degree of caution.

Our thinking here at DSWP, is that what we are mostly likely seeing is that the buoyancy of anticipation of ‘The Trump Effect’ has done most of what it could reasonably have been expected to do. Note that we said ‘anticipation’, which is different from actual impact of policy. Markets have enjoyed the sizzle and could now be waiting for the steak. This to us the Occam’s razor explanation of the current market behavior. Accordingly, we think it is a consolidation phase. Not everyone is taking comfort however.

On Tuesday, Lloyd Blankfein, the Goldman Sachs chief was heard showing a sign of discomfort: “Every time I get accustomed to low volatility, like we were towards the end of the Greenspan era, and we think we have all the levers under the control … something erupts to remind us that the idea that anybody is in control of everything is hubris,” Blankfein told CNBC’s “Power Lunch” from the sidelines of the company’s director symposium in Chicago.

“I don’t know what brings us out of the doldrums, but I do know this is not a normal resting state,” he said.


Market Minute 5/12/2017 –  So Far, Sellers are Wrong!

Recently we wrote some articles related to the old adage ‘Sell in May and go away’ in which we suggested that this year is likely not going to be a good year to sell in May. We’re only 2 weeks into the month of May, and that’s not much of a trend, however here’s a couple of numbers as of market close last night. (Numbers courtesy of Fasttrack software.)

Dow Industrial Index* –  up 0.1%  

S&P 500 Index*            –  up 0.55%

Nasdaq Index*             –  up 1.69%

Europe Index*              –  up 1.69%

Vanguard All-World Index* – up 0.95%

Emerging Markets Index*      –  up 0.92%

Now admittedly those numbers look small but, remember that those are the gains for 2 weeks only. Most major indexes are moving upward, with the notable exception of the small-cap US stocks. It’s too early to say the ‘sell in May’ people were wrong, but it’s certainly looking like it was a good idea to be a buyer rather than a seller.  So far, so good.  

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
10000 N. 31st Avenue, Suite C-262

Phoenix, AZ 85051

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at info@denkinvest.com.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.