What Goes Up… Can Keep Going Up?
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By: Michael Foster CFA, CFP®
It’s been a hot start to 2024 for financial markets. After a strong 2023, January looks to be another solid month to begin the year. Both the S&P 500 and Dow Jones Industrial Average have hit new highs already in 2024. While those that have been invested have likely seen gains, they may be wondering if this can continue. Global conflict appears to be increasing, there’s uncertainty with an upcoming election, interest rates are still elevated from recent years, and countless other worries may come to mind. Are we due for a correction? Can markets really sustain this? Did I almost name this blog after a cheesy Creed song? What goes up must come down, right?
When it comes to investing, markets have historically done well even after new highs. The chart below shows how the S&P 500 has performed on average over the subsequent 1, 3, and 5-year periods following a new high. Not only do you see positive returns, but strongly positive returns following a new record. This isn’t to say that markets can’t or don’t decline following highs, but that investors that stay the course have, on average, been rewarded despite the market hitting previously uncharted territory.
With markets, what goes up doesn’t necessarily have to come down. Investors that take a long-term view have been rewarded through weathering declines, looking past new highs, and focusing on their time horizon instead of the day-to-day minutia.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data are historical and are no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.
Nothing in this material should be construed as investment advice offered by Dolan Capital Advisors, Inc. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction, or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction, or investment strategy. You should speak with your own financial professional before making any investment decisions.
Past performance is not indicative of future results. Dolan Capital Advisors, Inc. does not guarantee any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.
Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance, or events to differ materially from those expressed or implied in such statements.
Ben Dolan and Michael Foster are investment advisor representatives of Dolan Capital Advisors a North Carolina state-registered investment adviser. Investment advice offered through Dolan Capital Advisors, Inc.