Market At All Time Highs, What's Next?

The market is reaching all-time highs and I’ve heard many times, from sources that many of us put a lot of credibility in, that this cannot last. This is too good to be true. This rally is not real.

Here are two diagrams that look at history, and reveal a different story. First, from Morningstar, the diagram shows how long stock market rallies have lasted in the past and how much they have gained before they stopped going up. Looks to me like this one, that we are experiencing right now, and that few of us believe is real, is average.

Well, maybe, like the men and women from Lake Wobegone, “we’re all above average.” We all believe we are above average drivers. What about this rally? Nothing to it. It happens more often than we realize.

us bull markets bear markets 1903 2016

The second chart is even more interesting. From my point of view, it says the only day we have to invest is today. Waiting, especially when the market is making new highs, is potentially timing yourself out of some of the best returns you could get.;

According to Athena Invest, 56% of the days after the market hits a new high, it goes up again (hitting another new high). Consider these points:

  • 42% of the days after the market hits a new high, it goes down but only takes 17 days to get back to yet another new high.
  • 1% of the time, after the market hits a new high, it goes down and takes 8 months to get back to another new high.
  • 1% of the time, after the market hits a new high, it goes into a bear market and takes 6 years to hit a new high.

When you invest in stocks, the odds of your success could be stacked in your favor! But did you realize the odds of your success are this good? It's astonishing, really.

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