What Should You Do When the Market Reaches New Highs?
Our market has made considerable gains recently, but that doesn’t mean you should try to time it. Let me tell you why.
What should you make of all the market highs we’ve seen lately?
2017 was a banner year for stocks—not just in the U.S., but around the world. There have been some great fundamentals, with corporate profit growth and economic gains both here and abroad.
Our economy experienced a 3.3% growth in GDP, which is the second consecutive quarter that has seen a growth of more than 3%. That’s the first time this has happened in three years. S&P profits have grown 8.4% over the previous year, and some analysts predict a double-digit growth in 2018.
When considering all of these strong gains and economic tailwinds, most investors will do one of two things—they’ll either throw more money into the market or sit on the sidelines.
Here’s my advice: timing the market is never a good idea. Leave that to the gamblers. This year alone, the S&P 500 has seen almost 60 new highs. That’s on top of a string of new highs we saw throughout 2013. If you sat on the sidelines the first time the market made a new high, you would have missed out on a whole bunch of new highs and gains that followed.
A new market high means one thing—it means the market closed higher on that day than it did the previous day. That’s it. It’s not necessarily a foreshadowing of an imminent downturn.
If you have any more questions about our market, feel free to give me a call or send me an email. I’d be glad to help you.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representatives of the U.S. Stock Market. One cannot invest directly in an index. Past performance does not guarantee future results.
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