We’ve heard from several clients this week that they read in the media that the market has come too far too fast, and wondered if they should be concerned because the market is up more than ‘average’. Those calls prompt this commentary.

I do not want to be an average investor, and my belief is that you do not either. You want to weigh the evidence in order to make the best evidence-based decision, as do we. You don’t care that what happened the last 3 days hasn’t happened in 5 years, or in 50 years for that matter. You don’t care that ‘on average’ the market has done X whenever something else did Y. Question – How does knowing that the S&P500* rallies 1.3% ‘on average’ help you at all?  It doesn’t.

If we merely study what is average, we will remain merely average.  If average is our goal, quite likely that’s where we’ll end up.

Let’s look at the S&P500 because it’s such an easy example that so many of us can relate to. We know that “on average” it returns 8-10% a year, but it rarely actually returns 8-10% a year. When you look at actual returns, we see years where you’re up 43% and up 54% and other years where you’re down 37% and down 43%. In fact, these sorts of volatile returns are actually much more common that “the average” return. Why? Because, we don’t live in an average world. Never have. Likely never will. The columns that try to warn you that this year is ‘too good’ are certainly ignoring the reality of NON-average returns.

So, when someone tells you that “on average” the market does X on the week of Thanksgiving, or “on average” XYZ goes up X after earnings, ask them, “Who cares and why are you wasting my time?” Don’t let airtime fillers waste your work day with irrelevant statistics describing what may happen “on average”.

(Drawings by Joseph Mirachi in The New Yorker Magazine)

What about the financial media? They truly love mining lots of data that can be used as fodder for hours of discussion. If it’s TV, those hours of content have to be filled with something that looks or sounds like news even when there isn’t any news. The financial media is not in the business of making money in the market, nor are they in the business of helping you achieve your goals. They don’t care about your portfolio. That’s not their business. The media is in the business of selling ads to their advertisers. And it is not just television. Do you know what gets a lot of clicks? Some irrelevant data mined fact about what happens in an average amount of time or how long it’s been since something completely arbitrary took place.

The Financial Media sometimes makes it seem like they are there to help you but their actions clearly speak much louder. Their business model is not a secret: Maximize clicks and views to sell more ads. As market participants our only business model is to make money in the market.

You see the difference?

Information is always good and the financial media can and does provide a lot of useful information. What bothers me so much — and what I caution the readers of this newsletter about — is the stuff that is not information but is instead the illusion of information. And so, anytime you are using the TV screen or the computer screen, pretend there is a little sign below it that says ‘Use with Caution’.

By the way, so far this year’s market returns are great. Yes that’s true! Is it unreasonable? No. Is it average?  Also…no!

Market Minute 10/31/2017 – Breaking News! Warning! Oh No!

As we have mostly only good news on the current market environment, I thought I’d better use a negative headline so you’ll read this. Other than the 10-year treasury interest rate hitting some resistance and dropping back down a shade, (which means those treasury bonds are up a shade) we can’t find much to be concerned about in this week’s market activity. We’ve had a few more record highs in some of the major indexes, and world equities – both developed and developing – are continuing their show of strength. I wouldn’t be surprised to see a bit of a pause in the gains of the major indexes, to give them a rest before continuing on to 4th quarter new records (repeat- this is my opinion). But there is no doubt that the main trends over most of the world’s markets are up!


Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051

Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk

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.