Denver, CO

Improving Investor Behavior: Market forecasting is a loser’s game

Published

2 hours ago

August 18, 2024

It’s Friday, Aug. 2, and I’m writing this article with CNBC open on my browser. The headline shouts, “Dow Loses 750 Points, Nasdaq Enters Correction After Weak Jobs Report.” The week was rough, with markets retracting from what felt like a month of steady new highs. A scant few weeks ago, investors were piling cash into highly valued tech stocks. Now they can’t seem to exit fast enough. Fear and greed pervade.

For frequent readers of this column, a correction should come as no surprise. They happen every 12 to 18 months as a “normal” part of financial markets reacting to economic and market growth. Corporate earnings, the most recent jobs report, and the wait-and-see Federal Reserve seem to be contributing factors, but focusing on these each month is akin to analyzing the bugs on your windshield: watch too closely, and you’re likely to crash. For long-term investors, “corrections” (I still dislike that word) are a mere hiccup on the path to a bigger future.

Steve Booren (handout)

But news broadcasters, of course, have a different perspective. The week’s headlines touted “Investor Recession Fears,” “Sharpest Weekly Losses.” In the next breath we read “Earnings Flurry Boosts Indexes,” and “Dow Closes Higher Buoyed by Bullish Inflation Report.” Bull or bear, it’s been a dramatic couple of weeks. As Dickens wrote, “It was the best of times, it was the worst of times.”

The news is inherently reactive. Anchors have the unenviable task of filling 24 hours of on-air time daily, so besides reporting on the event, they also feel the need to attempt to explain why it happened (or add some drama). Sometimes this is straightforward; other times — especially around financial markets — it’s downright impossible.

Daily market movements are random. Period. For fun, start each day by guessing whether your favorite index is going to finish the day up or down. Write down your guess. Do it for a month, and see how many days you get it right. The reality is that daily market movements are affected by so many variables that choosing up, down, or flat follows the same probability as a coin flip. What’s comical is financial media’s need to explain why the coin landed heads up.

Remember: volatility drives the narrative; the narrative does not drive volatility. When markets go down, “professionals” attempt to explain why. Maybe they’re right, maybe they’re wrong, but we can never measure their accuracy. So why do we listen to them?

As humans, we want answers. Cause and effect. The market went down 800 points; why? Markets are hugely amorphous, so we turn to “professionals” to explain the details. They give us a “reason,” and we wonder how we could be so silly to have missed the signs.

Taking a step back shows us how crazy it is to believe one person could flawlessly understand why markets moved on any given day. This is akin to someone explaining that the coin landed heads up because the wind blew. It’s insanity, yet we expect it, accept it, and worse yet, get on board with it. Human behavior craves certainty and stability, yet these are mere mental mirages crafted by those seeking to keep our attention.

This leads to an even bigger problem: predictions. Given an audience, reporters may feel empowered to start guessing the outcome of the coin flip before it even starts. Viewers might like to understand why something happened, but if they could know the outcome ahead of time? Well, that’s the promised land. And the media loves to give the viewer what they want, even if it’s completely wrong.

This is nothing new. In the mid-1980s, as a fresh-faced adviser working for a large firm, I once picked up a renowned economist from Stapleton Airport. My job was to drive him to Breckenridge for a research conference where he’d present his future predictions. At the time, interest rates were climbing, inflation was high, and he believed emphatically that mortgage rates were going to keep rising and never come back down.

That guess was wrong. Very wrong. Later in his career, he said Y2K was going to cause a worldwide recession, comparing it to the energy crisis of the early 1970s. Wrong again. Today he (naturally) owns a huge market research firm. As our compliance department says, “Past performance is not indicative of future success.”

Though we may wish for accurate forecasting, the truth is we have no facts about the future. We don’t know what will happen or how markets will react. Humans tend to make decisions with emotion instead of common sense, and we ignore mistakes and the wisdom they bring. That’s why human nature is a poor investor.

Choosing to do the right thing — the hard thing — takes effort and discipline. It also takes a perspective that feels unnatural but makes sense when taken at face value. Invest for the long term. Remove the guesswork, and ignore those who try to convince you they have an edge. Fall back on humility as a key character trait, recognizing that your knowledge and assumptions have limits. Above all, ask why. Not why something happened; in markets that answer isn’t knowable. Instead ask why someone is trying to explain the unexplainable. You’ll find far more insight.

Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income.” He was named by Forbes as a 2021 Best-in-State Wealth Advisor, and a Barron’s 2021 Top Advisor by State. This column is not intended to provide specific investment advice or recommendations.

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Denver, CO

Broncos’ Courtland Sutton Dissed in NFL Preseason WR Rankings

Published

9 hours ago

August 18, 2024

Press Room

Broncos’ Courtland Sutton Dissed in NFL Preseason WR Rankings

The Denver Broncos entered 2024 riddled with questions. Most eyeballs will rightfully be on rookie quarterback Bo Nix.

Will he wind up being the quality of quarterback that gives Denver its first long-term option at the position since Peyton Manning and someone who can give the team a fighting chance against the likes of Patrick Mahomes and Justin Herbert going forward?

Early indications are that Broncos head coach Sean Payton might have found an ideal fit for his offense as Nix has impressed in preseason and training camp overall. If Nix is the guy, though, the Broncos will likely need to improve upon their passing weapons to maximize the young quarterback on his rookie contract.

Wide receiver, specifically, is a question for the Broncos this season. With Courtland Sutton back following a restructured contract, the rest of the receiver room is replete with unknowns.

Given the lack of sizzle at the position, the 33rd Team’s Ian Valentino ranked Denvers’ wide receiver room as the 22nd-best group in the NFL entering 2024.

“In theory, the Denver Broncos have a receiving corps worth this ranking. Courtland Sutton is more of a quality No. 2 receiver than a star, and Tim Patrick was a good player before missing the 2022 and 2023 seasons.

“Josh Reynolds was a valuable piece in Detroit and will play a role in Denver. Troy Franklin and Marvin Mims were good and productive in college, but one or both need to make an impact right away for Denver to justify being over teams with a better No. 1 option,” Valentino wrote.

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With Sutton having been plagued with subpar quarterback play, a variety of different schemes with a revolving door of coaching regimes, and having to come back from a significant knee injury, it’s unfair to box him as purely a quality No. 2 receiver. He was on the receiving end of many of last year’s improbable Russell Wilson completions, hauling in a whopping 10 touchdowns.

At this point in his career, perhaps Sutton is best served as an X and a high-end No. 2, but with better (and more consistent) quarterback play and a renowned offensive play-caller in Payton, there could be some WR1 upside there — even if Sutton does not become a superstar playmaker.

After Sutton, though, who else steps up and emerges remains to be seen. Patrick was a really promising find by the Broncos when he was handed a new contract in the 2021 season.

However, after suffering season-ending injuries in back-to-back training camps, forgive Broncos Country for being a bit guarded before believing in a healthy over-30 Patrick emerging as a big-time contributor for the team.

It’s Mims whom the Broncos need to take a large step up this season. The 2023 second-rounder is coming off of a Pro Bowl/All-Pro season as a special teams returner, but it will be his ability as a receiver that will determine most of his value and worth, as Denver traded up to acquire him, after all.

While Mims caught a touchdown pass in preseason Game 1 against the Indianapolis Colts and got an early rep with the ones, he was relegated to the second team earning snaps behind Sutton, Patrick, and Reynolds.

Can Mims emerge as a top-three receiver and an explosive play threat the Broncos desperately need on paper? Time will tell.

Reynolds appears to have been a savvy signing by the Broncos. He’s solid, versatile, big, and physical. He may have mistimed a possible touchdown from Nix against the Colts, but he provides an excellent floor as a player with many unknowns.

However, a glance at Reynolds’ contract, in comparison to the current eye-popping wide receiver market, should cap expectations that he’ll be a massive difference-making playmaker. Signing for a two-year, $9 million contract, his $4.5-million-per-year deal ranks 51st amongst wide receivers in the NFL. It’s a contract and market that would indicate he’s a useful player but not someone likely to be the type of dynamic playmaker teams covet.

After those four, it really could be anyone to earn the last roster spot or two. While Franklin was coveted enough by Denver to move up for early Day 3, he has been reportedly up and down leading up to the start of the season.

Apparently, the other receiver from Denver’s draft class — Devaughn Vele — has been more of a standout so far. Perhaps David Sills, Jalen Virgil, Brandon Johnson, or Lil’Jordan Humphrey will take one of the last spots. Special teams will play a big role in the last receivers to make the 53-man roster.

Overall, the Broncos’ wide receiver room has options and names, but after Sutton, who emerges and what quality of play they provide remains to be seen. Luckily for Denver, Payton hasn’t traditionally needed a plethora of weapons to scheme players open and field a plus-offense.

With Payton’s play calling, a smart and accurate quarterback, and an offensive line that can dictate on the ground and keep the quarterback upright, Denver might not need a star-studded cast of pass-catchers. Still, the room doesn’t look outstanding on paper and is a position to monitor going forward this season.

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Packers Veterans Gush About Broncos QB Bo Nix After Joint Practice

Published

16 hours ago

August 17, 2024

Press Room

Packers Veterans Gush About Broncos QB Bo Nix After Joint Practice

The Denver Broncos‘ joint practice sessions with the Green Bay Packers on Friday provided another test for rookie quarterback Bo Nix. In what’s becoming a recurring theme, the Broncos starting-quarterback-in-waiting sailed through the challenge with a calm serenity, which is coming to typify his focused personality.

It’s already well-documented that Nix is wowing his own teammates, but he also impressed the league’s highest-paid cornerback, Jaire Alexander, as practice wore on under a Mile-High sun.

“I like Bo Nix,” Alexander said, via Chris Tomasson of The Denver Gazette. “I think he’s a young talent and I think he’s gonna be a pretty good quarterback in this league… As practice went along, his decision-making became crisper. It became better. He carries himself like a veteran.”

On the doorstep of his first professional start, Nix looks like a rookie in name only, according to Alexander. Perhaps his level of comfortability should be chalked up to the NCAA-record 61 college starts spanning the SEC and PAC-12.

While that experience undoubtedly plays its part, Nix has a method of keeping himself relaxed and mentally in tune with what he needs to do so that pressure can be managed.

“I learned early in college that the more pressure you put on yourself, the tougher it is to go out there and play free,” Nix admitted. “Over the past couple of seasons, I feel like I’ve played more and more free. That’s contributed to the good days. There’s enough pressure on you already, so you might as well just go out there and have fun playing the game of football. Not many people get this opportunity, and I’m just blessed to be here and be part of such a great team and great organization. I still always wake up and be like, ‘You know what? I get to go practice for an NFL team today.’ So can’t imagine what it is like playing on Sundays yet, but we’re almost there.”

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In all fairness, Packers superstar quarterback Jordan Love looked far less composed than Nix did during the joint practices. Much like Week 7 last year, the Broncos’ aggressive defense caused him problems all day long.

Following practice, Love was magnanimous enough to tip his cap to Nix, admitting that he’s a big fan of the Broncos’ rookie and what he can do over the long haul.

“I’m a big supporter of Bo Nix,” Love remarked, via Tomasson. “We’ll see what pans out in that QB situation… I wish him all the best if he gets an opportunity to start, play in some games this year. He’s in it for the long journey, keep stepping up and get better every day.”

As the days and practice sessions slide by, Nix is undeniably cementing his position as the probable starter for Broncos head coach Sean Payton moving forward. That being said, and as Nix’s Packers counterpart can attest to, the NFL’s challenges only increase in ferocity.

Therefore, Nix is well aware that the best way to navigate the notoriously steep NFL learning curve is by fully committing to improving daily.

“It’s steep, but I think whenever you learn a new offense or whenever you get into a new level [or a] new scheme, it’s always going to be different,” Nix said about embracing the process. “There is always going to be learning curves and there is always going to be a lot of change. You just have to adapt to the change and welcome the change as much as possible. Just kind of make things normal, make a new routine and get in there and study real hard and make sure you know what you’re doing. Even today in practice, you have to think through plays. Even though you go through it the night before, you might get a different look, or you may get something that you haven’t talked about and you have to kind of rely on your reaction. It’s definitely steep, but so far, I feel comfortable and I’m excited to move forward and learn even more.”

The Broncos ascending rookie might be calm as the hype starts to snowball, but the fans might start losing their minds real soon.

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