Market's Up Despite Last Week's Bearish Headlines

The market's way up again as this 1 month DJIA Yahoo screenshot shows.

I don't really want to pick on Barron's because it is one of the best pubs out there for investors, large and small, but they are posting some very questionable advice.

Take the following headline from last Saturday's issue: The Best ETFs for a Choppy Market

Without picking on the usually excellent writer, the entire premise of the story is the fault. This is a "With all this uncertainty, investors who want to take some risk off the table and become a bit more defensive should ..." kind of article.  Why take risk "off the table"?

A critical reader will ask: When is the market NOT choppy? There is always uncertainty and that's the problem.  Anyway how do we know we are taking risk off the table and what are we giving up when we do?

The story then quotes a portfolio manager who says "Investors should aim for “minimum volatility, greater diversification and keeping an eye on asset allocation,’’ to reduce risk. I am not sure this is even possible.  How do you know any certain stock, fund or ETF will reduce risk? Buy and hold indexers know this is impossible.

What we do know is whenever markets fall they historically recover. This is despite Presidents, economies, wars, recessions and depression-such is the nature of our shape-shifting stock market for two centuries. What DOES matter to investors is their need for funds and their ability to wait out any downturns.

Sadly, money managers can only beat indexes when the indexes decline. But these declines don't last and investors who take manager advice usually lose out in the same way that managers underperform.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.