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"Buy low, sell high" is one of the most often recited recipes for making money in the stock market. Yet, it is hard to believe that attractively low prices are available today, in an environment where headlines repeatedly cry: "equities reach a new all-time high." Is it possible to make money today, in this high-priced market? Yes. History tells us that equities, even when purchased at new highs, have offered long-term opportunity for investors.
Let's examine the data.
All-Time High Entry Point
The table below compares the average gain experienced by investing on days when the market is at an all-time high, with the average gain experienced by investing on days when markets are not at all-time highs. The first two columns show the cumulative gain over various periods of investing, when your starting point is an all-time high, or not at an all-time high. The second two columns show the probability of a positive return in both scenarios. The numbers are surprisingly similar until you get out to a 10+ year time horizon. And even then, strong returns are possible when starting at an all-time high.
Bottom line, no one knows for sure how much longer the current bull market will last. We do know that timing the top is unlikely to work, and staying out of the market may significantly reduce your chances of meeting your long term financial goals. Our advice? Stay invested. Just make sure your exposure to stocks is appropriate (not too high), given your risk tolerance, liquidity needs and time horizon.
Click
here to view a larger version of the table above.
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Stocks rose last week with the large cap indices touching new highs (see observation above for context). Investors were able to shrug off political developments including limited progress on the health care bill and emails regarding a meeting between Russian contacts and the President's son. Instead, they were encouraged by Congressional testimony from Fed Chair, Janet Yellen, who offered reassurances on the state of the economy.
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> S&P 500 Sector Performance: In the second quarter, biotech strength helped Healthcare turn in the top sector performance. Technology gained as well, but started to show some cracks late in the quarter.
Energy weakness hurt values while, Financials did well on optimism over upcoming potential deregulation.
> Equity Asset Classes: Large caps bested their mid and small cap counterparts, but from a global perspective, emerging markets and large foreign markets turned in the best performance of the quarter.
> Fixed Income Asset Class Returns:
The Bloomberg Barclays Aggregate Bond Index returned 1.45%, with longer maturities outpacing short. More economically sensitive fixed income, including investment grade corporates and high yield, outpaced high quality.
At the end of the second quarter, the theme for 2017 remains: higher equity prices amid historically low volatility.
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Shark Week is an annual, week-long event on Discovery Channel that features shark-based programming. It has aired each summer since 1988,
and was originally devoted to conservation efforts and correcting misconceptions about sharks. But more recently it has evolved into a summer headliner with a cult following.
Enter this weekend's feature: Phelps vs. Shark, hyped with the following:
They are one of the fastest and most efficient predators on the planet: Sharks. He is our greatest champion to ever get in the water: Michael Phelps. 39 world records. 23 Olympic golds. But he has one competition left to win. An event so monumental no one has ever attempted it before. The world's most decorated athlete takes on the ocean's most efficient predator.
Despite the hype, it shouldn't be much of a contest. Michael's fastest speed is 5 or 6 miles per hour whereas a shark can hit 25 miles per hour in short bursts. Still, it should make for entertaining television! The feature kicks off Shark Week; "
Great Gold vs. Great White" airs Sunday, July 23 at 8 pm.
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New Market Wealth Management offers modern investment solutions backed by extensive research and experience serving the needs of wealthy families. Through our strategic partnership with
Cliffwater LLC
, we provide institutional-quality research, investment due diligence and asset allocation tools. We believe this level of experience and unique access to in-depth, sophisticated research are essential for success in today's complex world markets.
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