Stop The Madness & Turn Off CNBC

| October 11, 2018
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This is what the headlines blared on Wednesday night post the move lower in every broad US stock index:

This chart add NO Value to anything – other than providing me a topic to rant on!

Points don’t matter. Percentages do.

Main Stream Media likes to use the Dow Jones Industrial Average because it has large numbers and a drop of 832 points sound awful as they try to draw you in to this senseless fodder for advertising dollars.

I have never once in my 20+ years in this business interviewed a manager that uses the Dow Jones Industrial Average as their benchmark. NADA!

Here is the math.

If the Dow Jones Industrial Average was at 10,000 and dropped 832 points that would be an 8.32% correction.

But on Wednesday the Dow Jones Industrial Average started the day at 26,430. It then dropped the same 832 points. But that is 3.14%.

While not fun, it has to be put into context.

Here Is What You Need To Know

  • Since 1928 the S&P 500 has seen 325 days w/losses of 3% or worse. That means it happens roughly 3.5 x a year on average.
  • Since 1980, the average intra-year drawdown in the S&P 500 is 14%.
  • Since the March 2009 low, there have been 23 corrections in the S&P 500 greater than 5%.

PANIC IS NOT AN INVESTMENT STRATEGY.

NEITHER IS HOPE.

 

Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O

 

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