Watching the “market” squeeze the “false credibility” out of the “experts” these past few days has been entertaining if nothing else. After Monday’s drop the message was that “everyone should have seen the correction coming.” For example, the lead story in the New York Times read “Signs, Long Unheeded, Now Point to Risks in U.S. Economy.” OOPS!
I never have liked the term “correction” to explain a move in the market indices. By definition it implies that the market “got it wrong,” being under or over valued. So looking at the market as I write this, I guess the past few days the market “over corrected” and has now “corrected” the “correction.” You can see how this starts to become a bit silly, but it also shows how little credibility should be given to the “talking heads” and journalist posing as “experts.”
But alas, they are not the problem. As Pogo once said, “we have found the enemy and it is us!” Investors, both large and small, demand an explanation regarding what has happened in the past, but more importantly, a forecast of what to expect in the future. The first demand, an explanation of what has already happened, that’s not worth much.
The second demand, a forecast of what the market will do in the future, that would be invaluable, if only it was accurate. Anyone who could make accurate forecasts consistently, would have unlimited wealth and not be spending their time on CNBC or Fox Business News sharing their forecast with us.
For you advisors, about a year ago, four years into a bull market, I suggested you hold a “fire drill” for your clients. If you did, great, if not perhaps this would be a good time. For you investors, not speculators, you are in it for the long run, so don’t waste your valuable time stressing about the market. Enjoy your life knowing with certainty, that you will have a successful investment experience.