A Weakening Market According To Goldman Sachs, Time To Sell?

“Quickly Address Mistakes, Or You’ll Stop Learning.”
Ben Hardy

But what if people don’t know they’re making mistakes? Or what if they don’t know what those mistakes are? Or even worse, what if people think the source of their mistakes are other people?

AND what if one of those mistakes was watching the news?

Perhaps it’s time we realize that consuming more news is not the way to improve life (or ourselves), personally or politically. Ryan Holiday

Stress in American is at it’s highest level EVER.

Higher than when America was in WWII, The Vietnam War and even during September 11, 2001.

Stress in AmericaTM poll shows US at its highest stress level yet. The report goes on to say, More than half of Americans (59 percent) said they consider this the lowest point in U.S. history that they can remember.

And guess where this stress is coming from?

The News.

The more “news” people consume the worse they are feeling AND they can’t seem to stop watching, even when they know it’s hurting them.

The Weakening Stock Market

And according to the news… the market is weakening. Here’s just three easy examples:

Here’s Goldman Sachs telling people how weak the stock market is because of future weakening economic growth .

Here’s an article right on the NASDAQ’s own website talking about how rising interest rates are weakening the stock market.

Here’s CNBC talking about how the stock market is weakening because of certain breadth indicators.

Like or hate Trump, he’s been a boom for news outlets.

Here’s Leslie Moonves, the Chief Executive of CBS talking about the current toxic political environment, “It may not be good for America, but it’s damn good for CBS.” And Leslie’s probably right. Trump has been great for news outlets.  

To solve a big problem. You must get a bigger perspective.

So let’s get a bigger perspective.

Here’s the perspective from three simple price charts.

What’s different about these three price charts is the way they weigh each stock in its index or ETF. The all weigh each stock equally. So the largest stock, Apple would be weighted the same as its smallest, News Corporation Class B shares.

For example Apple carries a 4.4% weighting in the S&P500 index. A market-cap weighted index. And News Corporation B shares carries a .007% weighting. You can see all the weightings in a typical or market-cap weighted index at Slick Charts.  

BUT if you look at the market through an equal weighted lense and weight each stock equally then one might be able to see if in fact the market is weakening. Because looking through this lens News Corp B Shares hold the same weighting as Apple.

Is the stock market weakening like Goldman Sachs and CNBC say it is?

The first of three charts is the equal weighted S&P500 ETF Chart, RSP. Where if you squint just a little bit you can see that it just hit new lifetime highs.

Please note this price chart includes dividends.

This second price chart (below) is the Value Line Arithmetic Index.

This index is an equal weighted index that tracks 1675 stocks using the, wait for it, arithmetic mean method. Basically this method closely mimics the change in the index if you held a portfolio of the same stocks in equal dollar amounts.

As you can see below this (arithmetic) equal weighted index is at new lifetime highs. Again, it’s measuring 1675 stocks.

And then lastly is the Value Line Geometric Index.

As you can see below the Geometric measured Value Line Index is just a hair’s breadth below lifetime highs. About 0.42% below to be exact.

If you want more information on how the geometric method is used in the Value Lines Index, you can find that answer here, along with other Value Line Index questions getting answered.

So if you find yourself worrying about the future and you feel like your problems are getting bigger and not smaller with retirement on the horizon. Take a bigger perspective.

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP

P.S. Perspective is hard to get if your stuck in the noise machines. Take a minute to sign up to watch my latest Master Class, titled Wealth On Demand. In it I show how outdated ideas are hurting people’s futures.  

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