The Delusion of Expertise among Financial Advisors Redux

SYNOPSIS

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If only it were this simple to put an end to Trump’s grand plan to start a world-wide trade war. The rhetoric is already taking its toll on the markets. So the Dow dropped over 1400 points over the week, while the S&P 500 was off 5.9%. Which statistic sounds worse? Of course the DJI number; so the media were all over that to spread hysteria. In fact though the Dow was down 5.7%… a little less than the S&P 500. And the ever popular Nasdaq fell 6.5%, making the 1400 point drop in the Dow look pretty good!

PTP… Naturally, our PTP score suffered with the overall market decline last week, in addition to the impact of a bit of trading. Buying into a dropping market was not such a good idea, but we didn’t know that early in the week. Both the S&P 500 and S&P/TSX Composite Index APARs turned negative by Friday’s close.

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Day by Day… Here’s how last week played out on a daily basis. The percentage changes in the actual indexes are shown relative to the previous Friday close. The results are grim, with US stocks taking the brunt of the losses.

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PTA Perspective… The Delusion of Expertise among Financial Advisors Redux
“Redux” is a handy, but not often used, word that means “brought back”. Every now and then we pull a piece from our archives that has withstood the test of time, while at the same time is not simply a chapter describing previous events. We’re talking about a theme or some research that is as valuable now, as when we published it the first time. And yet, it contains knowledge that is still not well-appreciated in the present. In this case we’re talking about the delusional nature of financial advisor expertise. Come to understand how limited so-called “financial advisors” really are.