New Highs in the Stock Market!
The S&P 500 recently hit all-time highs. Surely, we should despair. Right?
Well, no.
Remember, the stock market has gone up a lot, or maybe even magnitudes of a lot, over the last 100 years. That historical path has necessitated many all-time highs.
Ritholtz Wealth Management’s Ben Carlson states, “Since 1950, there have been new all-time highs on 6.7% of all trading days.”
That’s a lot!
And it’s actually more in bull markets. From Carlson:
“In the 1990s it was more than 12% of all trading days…From 2013-2019, it happened on 14% of all trading days…Despite two bear markets this decade, the S&P 500 has hit new all-time highs on 11% of all trading days in the 2020s.”
All to say, don’t fear the bear just because times are good. For long-term investors like you and me, good times tend to be followed by more good times, interrupted, only temporarily, by intense declines and corrections before continuing the upward march.
Consider this chart from J.P. Morgan:
As you can see, despite positive annual returns 75% of the time, intra-year drops are common, with an average annual decline of 14.2%.
All to say, don’t fear a correction either. They’re common, expected, and should be anticipated in your financial plan and investment strategy.