And why not? If you’re a financial advisor, you might come off as gutless and perhaps even ignorant if you blame the stock market’s moves on a host of factors that are too elusive to explain, even if you’re telling the truth.
 
If you’re a print or digital journalist, you have a bigger problem: You need to write a lead sentence explaining why stocks in general or a particular ticker rose or fell that day.
 
So it’s understandable why financial advisors and journos alike look for simply cause-and-effect relationships. Lately, the Federal Reserve’s actions, Greece’s woes, and other events are drawn into those explanations.
 
I’ve come across a couple of articles in recent days that drive home how the stock market defies easy explanations involving one or two news-driven variables.
 
One common saw about the Fed is that you’re not supposed to fight it. So if the Fed is about to raise rates, or actually enters into a rate-hiking campaign, the central bank is creating a powerful headwind for stock investors.
 
This thinking also informs daily reporting on the markets. A stock market may rise on a particular day because the Fed is hinting that it may push off rate hikes further than many had thought. In other words, rate hikes, bad for stocks; rate cuts, good.
 
But as Joseph Calhoun, a manager at Alhambra Investment Partners, puts it in his blog post, the notion of not “fighting the Fed” has many historical holes in it.
 
“The problem with this hoary old chestnut is that it is pretty lousy advice,” he writes. “It turns out the Fed isn’t nearly as powerful as the old saying implies. Yes, ultimately the economy will turn higher after a slump but whether that is because of the Fed or in spite of them is a bit murkier.”
 
As he puts it, “Anyone adhering to the don’t fight the Fed admonition in early 2001 would have walked right into a recession and a near halving of their equity portfolio. It didn’t matter that the Fed was easing.
 
We still got a recession and a bear market. A similar outcome awaited the believing soul who stayed the course with stocks in late 2007. The Fed was cutting like mad and it turned out that it didn’t matter one iota. The Great Recession still arrived and a bear market still mauled stocks by 50%.”
 
Calhoun points out that sometimes it’s wise not to fight the Fed. “One example is 1998 when the Fed cut the Funds rate three times during the Asian crisis. We didn’t have a recession and stocks went on to scale the heights of the dot com mania.”
 
But it’s clear that there are too many exceptions to the “don’t fight the Fed” rule to make it all that useful to investors.
 
There has also been a lot of talk lately about how a Greek debt default — if it occurs — could create a contagion effect that could hurt stocks in Western Europe and even the U.S.
 
And the worries are aplenty, particularly after the news that a key meeting of euro zone finance ministers broke up without agreement on Greece’s rescue package on Thursday. There are now doubts about whether Athens can make a crucial debt payment due in just a few days.
 
But as Neil Irwin, a columnist for the New York Times points out, Greece’s problems are more akin to the slow and predictable demise of RadioShack than they are akin to Lehman Brothers’ sudden and surprising collapse in September 2008, an event that crushed the broader U.S. stock market.
 
As Irwin puts it, “there is a much stronger case than there was when this whole saga began that a Greek default and exit would be more like RadioShack than like Lehman.”
 
He adds: “Greek debt is now overwhelmingly held by European governments and its central bank, not private banks, so a default is unlikely to trigger a continent-wide banking collapse.

The European Central Bank has pledged to do ‘whatever it takes’ to prevent a crisis of confidence in euro members’ debts, meaning it would backstop Portugal, Spain and Italy should markets lose faith.”
 
If Irwin has it right, that’s comforting news to U.S. investors.