Welcome, Sandbox friends.
Hope our U.S. readers all have a wonderful Presidents’ Day Weekend.
Markets are closed on Monday, so The Sandbox Daily will return to your inbox on Tuesday, February 20th with our regularly scheduled programming.
Today’s Daily discusses:
investing at all-time highs
Let’s dig in.
Quote of the day
“A systematic process is how you impose discipline on your lesser self, the one that makes all of the mistakes at the wrong times. Without a set of guidelines or principles to follow you’ll be constantly second-guessing every move you make after the fact. No one is right all the time, but without a consistent process you’ll be judging yourself against an impossible benchmark — short-term market fluctuations — a no-win situation.”
- Ben Carlson in Speculation has Always Been a Part of the Market and Always Will Be
Investing at all-time highs
With the major averages printing new all-time highs after a two-year bear market, many investors express a certain anxiety or discomfort holding their positions while the index resides at fresh new highs.
What many fail to realize though – until they look at a long-term chart – is that the stock market is often trading at or near all-time highs with some regularity.
Below is a breakdown showing the percentage of time that the S&P 500 has traded within various ranges of an all-time high since 1952.
As you can see, the S&P 500 trades within 5% of all-time highs 44% of the time. Within 10% of ATHs? 59.6% of the time.
In fact, even after a strong run in 2023, the market could continue to stretch its legs in 2024 – using history as a guide.
Over the last 50+ years, had you invested in the S&P 500 at an all-time high, your investment would have been higher a year later 73% of the time with a median return of 12.1%. This is in line with historical market averages – whether we are at all-time highs or not.
This is the chart I keep coming back to:
New highs are not scary.
In fact, quite the contrary.
Forward returns on average are in your favor.
Source: Bespoke Investment Group, J.P Morgan, A Wealth of Common Sense
That’s all for today.
Blake
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.