• Research and data-driven behavioral insights to guide client conversations

  • Practical application of behavioral finance to portfolio construction, management and analysis

  • Ideas, guides and materials designed to differentiate and grow your practice

  • Current market conditions from the Behavioral, Economic, Valuation, and Technical perspectives

How to Tune Out the Noise

Once again, we’re experiencing an upsurge in the noise around market volatility, increasing concerns about a trade war with China and future monetary policy. This can be overwhelming for the average investor and certainly hard to know when to be concerned and when to tune out the noise. Our market dashboard below shows that, while things may be noisy, there is no indication of an impending economic or market meltdown. We continue to follow the trade negotiations between the US and China and track whether they begins to tilt our market indicators.

 MarketViewDashboard 04 2019

Our Market Viewlooks at economic, valuation, technical and behavioral indicators to gauge the overall health of the market. Manufacturing and service provider activity measures economic health which is currently positive. Overall stock prices relative to future earnings measure valuation which are currently elevated and may be signaling some caution. Technical measures of short and medium-term momentum and market participation are excellent. Finally, our unique behavioral measure of expected market returns, based on investor preferences, are in normal ranges. This sort of mixed overall picture is fairly common and there is no cause for concern as long as the majority of indicators are in reasonable ranges. View click here.

Having a consistent view can help investors to know when to be concerned and when to tune out the noise. For long-term investors, a consistent view can provide a solid foundation and good perspective for reassurance and can help avoid overaction. The vast majority of the time the markets and economy are in relatively good shape and investors should stay on track with their long-term plans.

From the Behavioral Viewpoint

What is going on?

  1. We are loss averse and constantly on the lookout for potential threats. We want to believe we can identify and avoid every threat.
  2. Availability bias causes us to give media rhetoric and headlines more importance than they might otherwise deserve.
  3. We are subject to cascading and projection, where we build on events with speculation. “We will start a trade war, that will result in an economic meltdown, that will collapse the market and destroy my portfolio”.
  4. We are also subject to confirmation bias, and easily believe in things that support our existing point of view.

What can we do?

  1. Use a disciplined approach to monitor the market and economy that keeps your emotions in check.
  2. Stick to the same metrics month-to-month and year-to-year to provide a stable frame of reference.
  3. Have a financial plan and make investment decisions based on a disciplined investment process.
  4. Work with a professional financial advisor who can provide valuable experience and perspective to help you stay on track.

Behavioral Finance straight to your Inbox

Behavioral Viewpoints features new topics each month which are intended to help advisors and investors gain a deeper understanding of how behavior shapes the investing landscape.



The information provided here is for general informational purposes only and should not be considered an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. It should not be assumed that recommendations of AthenaInvest made herein or in the future will be profitable or will equal the past performance records of any AthenaInvest investment strategy or product. There can be no assurance that future recommendations will achieve comparable results. The author’s opinions may change, without notice, in reaction to shifting economic, market, business, and other conditions. AthenaInvest disclaims any responsibility to update such views. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of AthenaInvest.

You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives and financial circumstances. You should consult with a qualified financial adviser, legal or tax professional regarding your specific situation. Investments involve risk and unless otherwise stated, are not guaranteed.  Past Performance is no guarantee of future results.



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