Market Finishes Record Boring Week

Last Updated Oct 31, 2010 9:54 PM EDT

The final week in October saw the S&P 500 closing at 1,183.26, up from 1,183.08 from the previous Friday's close. Driving this gain of 0.015% were a combination of 81% of S&P 500 companies reporting better than expected earnings combined with slew of economic data all beating consensus forecast. That data included better than expected existing and new home sales, consumer confidence, durable goods orders, and jobless claims.

The bond market reacted to all of this positive news with the ten-year Treasury Note yield soaring one basis point.

Boring doesn't make headline news
Okay, so last week was the most boring week in financial markets I can remember, if not in the last hundred years. It's not only that we ended up almost exactly where we started, but the biggest move of the entire week for the S&P 500 was a 0.3% move.

Financial news and the market not in sync
In addition to this being a nearly unprecedented week of market boredom, it stands out for another reason. I can't remember a week when so much positive news came out, and with all of it being better than expected. I'll admit, if I had insider knowledge of this news, I would have bought into the market or maybe even used options. At the very least, I sure would have bet on some volatility from this very one-sided week of great news.

Lessons learned
I think there are a few lessons we learn from this.

  1. In short periods, such as a day or a week, the market can fool us and often doesn't react the way we think it should based on the circumstances. Markets are complex and their movements are often inexplicable, though the media never gives up trying to explain the unexplainable.
  2. The market usually gives us what we least expect. We expected continued volatility and to move up with good news. Surprise!
  3. Sometimes the best investment lessons come from boring weeks in the market like the past one.
  4. Finally, accept that we really don't know what to expect from the market. Don't just assume that next week will be less volatile than the recent past couple of years.
The market humbles us all. Those who accept that they don't know what next week will hold are on their way to becoming investors for the long-run. Those who make bets on what will happen over the next few weeks or months, will eventually pay the price of keeping markets efficient.

Last week's financial market movements offered investors no ups, no downs, no drama. That kind of news doesn't make headlines, but it should!

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.