Thankful For Another Great Year On Wall Street

This past Thanksgiving, millions of Americans sat at the dinner table and proclaimed what they were thankful for. For some, it was loved ones, new family members, a promotion at work or a new job altogether, but at the very least, the food that was about to be eaten was mentioned. The success of the stock market in 2019 was undoubtedly one of mine, but I may be in the minority when it comes to people who said such out loud.

However, with the major indexes again trading at new all-time highs, something we have now had occur more than 20 times in 2019, 18 times in 2018, 62 times in 2017 and another 126 times from the start of 2013 until the end of 2016, its hard not to think about how much further this bull market can run.

Adding new money to the market seems very risky today based on how far the market has come the past few years and considering we have seen so many new all-time highs over the past few years.

However, new all-time highs is a very normal thing for the market. Since 1928, the U.S. stock market has seen new all-time highs on 5% of the trading days. Think about that! That’s on average, one in every 20 trading days, the U.S. stock market is hitting an all-time high. From that perspective, a new all-time high sort of seems like not that big of a deal.

Another crazy thought is that since World War II, the U.S. stock market has spent nearly 40% of its time within 5% of all-time highs. Ok, so almost half the time stocks are trading within reach of an all-time high. Furthermore, 54% of the time stocks are trading within 10% of all-time highs.

However, that means 46% of the time stocks were more than double digits below their highs.

The point of spitting out all these statics is to show that the market goes higher. Stock prices go high. Yes, they fall from time to time, but over the long run, they go higher. And just because they are at all-time highs today, doesn’t mean they can’t hit new all-time highs tomorrow.

Another thing to consider is that when we have seen the markets pull back, the drops don’t last very long, with the average recession lasting just 10.4 months since the end of World War II.

Most investors today still remember the last recession, which lasted longer than that, but even still, the stock market hit new all-time highs just 6 years after doing so in 2008.

While 6 years may seem like a long time to wait for your investment money to get back to where it had been, perhaps your thinking about it the wrong way.

When the market falls, it allows you to buy shares at a lower price than previously available. While the price of your previously held investment may be worth less than what it once was, the cost of adding to your position is now cheaper.

If the stock market continued to climb higher for 6 years, would you only invest during the first year or two of that rise? Probably not. You would invest capital as it became available to you, whether that’s from the sale of other investments, dividends, paychecks, inheritances, or whatever.

So if the market was falling, wouldn’t it make sense to simply continue investing just as if the market was going higher. Since we know, in the long run, the market will go higher. And if stock prices are falling, that means nothing more than you are getting a stock ‘on sale’ from what it was selling at the day before.

The point of all of this is simply. Invest in stocks regardless of whether we are at all-time highs, 6-month lows, a crashing market, a booming rally because at the end of the day no one can tell you with any certainty what stocks will do the next day, or week, or month, or even year. But over the long run, years or even decades, stocks will always go higher.

Buying shares of an S&P 500 Exchange Traded Fund such as SPDR S&P 500 Trust ETF (SPY), the Vanguard S&P 500 ETF (VOO) or the iShares Core S&P 500 ETF (IVV) will give you the exposure to profit from one of the safest bets you will ever make, buying the U.S. stock market and holding it for the long term. And trust me, you will be thankful you bought in and continued to do so, decades from now.

Matt Thalman Contributor - ETFs
Follow me on Twitter @mthalman5513

Disclosure: This contributor did not own shares of any asset mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

One thought on “Thankful For Another Great Year On Wall Street

  1. That`s nuts, just don't hold all the time !!!! what about deflation of dollar or the goverment decides to discount your holdings 50 to 90% like in 1933,1944 1971. What about the next crash!!! the market doesn't go up for EVER..DA

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