The biggest advantage of passive investing is not that it mirrors the market; that advantage becomes a disadvantage when the market declines.  No, the real advantage of passive investing is that investors pay less attention to the inter- and intra-day fluctuations caused by headlines designed less to inform than to encourage reading long enough to view as many ads as they can throw at you.

The effect has been to frighten many investors out of the market at a time when some great returns are to be had.  If you allow yourself to be panicked out on down days then rush back in on up days you’re going to need a lot bigger supply of Rolaids.

Year to date, the S&P 500 is up 9.5%. The Dow Industrials are up 6.2%.  People like me are up a wee bit less, not because we give a hoot about the headlines but because we are asset allocators who own some income, some non-market-sensitive (but market-traded) smart beta alternatives, some REITs and actually keep a little cash on hand for emergency withdrawal or over-reactions that drive some of our favorite stocks down.  (This also makes those down days a lot less terrifying!)

Along the way as the “wisdom of the markets” have taken most stocks higher, the headlines have read as follows:

Immediately following the election, New York’s Daily News showed a photo of the White House.  Superimposed were the words “House of Horrors.”  From Germany Das Bild showed a photo of 5 women, ostensibly American, wailing and crying, with the headline “Wie konnte das passieren?” (How could this happen?)   In New Zealand it was “Dear America…NO, YOU CAN’T!”  Marches against the victory, lawsuits, demands for recounts, and “Not my president” campaigns began the very next day.  That day the Dow was up 263 points. By month-end it was up 807.

Since then every month, every week, every day the bulk of the headlines, and the stories that followed, headlines have been unfailing in predicting doom and gloom if not outright apocalypse.  That includes the current brouhaha characterized by MarketWatch’s current headline story titled “Trump threatens shutdown over border-wall funding, predicts end of Nafta,” with the sub-heading “President rails against opponents, perceived slights at Phoenix speech.”  This is how MarketWatch editors explain today’s 87-point drop.  I say it had and has little to no impact whatsoever.