What is Happening in the Market? The Media Does Not Have the Answer

Bob Stowe |

As the popular media scrambles to explain the unexplainable – what is going on in the markets at the moment and how long it’s going to last – we thought we’d share a headline of our own:

“The stock market is a giant distraction
to the business of investing.”

So said Vanguard founder John Bogle in his 2007 classic, “The Little Book of Common Sense Investing.” These are timeless words to invest by, as is Bogle’s deeper explanation of them:

“The expectations market is about speculation. The real market is about investing. The only logical conclusion: the stock market is a giant distraction that causes investors to focus on transitory and volatile investment expectations rather than on what is really important – the gradual accumulation of the returns earned by corporate business.”

Similarly, Dan Wheeler is now retired from his 20-plus years as a Dimensional Fund Advisors director, but he still posts his pithy ponderings at Wheeler Writes. Shortly after last August’s market correction, he had this to say about the “talking heads” of the day:

“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.’”

So, while we could indulge in incredible analyses of the latest economic news – China, oil, interest rates and so on – we won’t. We don’t want to distract you from the real task at hand.

Your job is to remember that these are the very kinds of intrinsic events that our evidence-based strategy is meant to help you look past, so you can achieve the kind of investment success that Bogle, Wheeler and countless others have described.