What An S&P 500 All-Time High Could Mean For Your Investments

Time value of money, long term investment, business growth or success growing business, make profit or investment gain concept, woman walk up growth rising up graph with sandglass metaphor of time.

What An S&P 500 All-Time High Could Mean For Your Investments

Time value of money, long term investment, business growth or success growing business, make profit or investment gain concept, woman walk up growth rising up graph with sandglass metaphor of time.

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The S&P 500 recently notched its first record close in more than two years. After falling more than 25% in 2022, the S&P 500 rose nearly 35% to retake a new all-time high in January 2024. Thus, a new bull market has arrived.

What comes next? Should investors sell and head for the hills? Not so fast. While knowing precisely how stocks will perform is impossible, history can serve as a helpful guide. Looking at S&P 500 data going back to 1958, the table below demonstrates 13 examples of how the stock market behaved after setting a new high for the first time in at least a year.

S&P 500 All-Time High

One year after each all-time high, stocks were up an average of 15.3% and positive in 12 out of 13 instances. After two years, that average climbed to 23%, with stocks positive 11 out of 13 times. The data strongly suggest that stocks typically remain productive for the next year or two after reaching new highs. Of course, there is no assurance that this will happen now, but history calls attention to the potential.

Entering a new bull market should be welcome news for investors. Since 1957, the average bull market has lasted nearly five years and generated an average S&P 500 return of more than 169%. That average encompasses a wide variety of bull market durations. The longest lasted from 1987-2000, with gains of over 580% in those 147 months. The shortest bull market ran less than two years with just over a 21% advance.

Some regard an all-time high as a terrible time to invest. A fear of heights might drive investors to sell and sit on the sidelines. There’s no right or wrong strategy, but in this case, a more optimistic approach led investors toward a lucrative outcome. As the chart below shows, investing at each all-time high in the S&P 500 between 1950 and 2019 brought about returns near average for 1, 3, and 5-year periods.

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