Investors Reach Dizzy Heights
Over a 96-year history, the S&P 500 has seen 16 Presidents, a handful of wars, bankruptcies, recessions, and even depressions. Yet at the closing bell yesterday, it notched a historic all-time high. Go, go, USA!
This is encouraging for passive investors in index funds. Rather than picking stocks, indexers piggy-back on the prosperity of their country over time, buying a cross-section of the entire stock market for a diversified, defensive, and long-term play. It’s a hands-off approach which last night, paid off. All being well, index fund investors will be sipping champagne tonight too as they celebrate a further triumph of doing sweet nothing!
It would have taken a brave investor to predict this at Christmas when the market teetered on the brink. But as explained by Kathy Entwistle of UBS, “market spirits are lifted based on numbers and perception. If the perception is rates are getting cut, that’s going to drive markets higher.” Bang on. In fact, this perception has become so popular that threats to the stock market are even helping it get higher! Trade tensions, slowing growth, and anxieties over Iran are all issues that ramp up the perception of a market-boosting rate cut on the way. What gives?
Plenty of investors see these record highs from a different vantage point. Many have complained that finding value for money is harder now on the stock market, given the dreamy behavior that all-time highs often prompt. For now, all smiles. Stay tuned to the markets today as investors explore unknown territory.