An answer, in one chart

We’ve fielded a few calls recently from clients, who’ve asked if any changes should be made now that we’ve hit new highs in the US indices. Like any answer, we defer to the data and evidence. What does the evidence says happens after we hit new highs? The answer…

…is business as usual. This chart tells us that the markets are higher a year after a new high 80.5% of the time, about the same frequency as any other time – even a little more often, though not statistically significant. A market peak, therefore, tells us nothing about the future direction of the market.

Trying to pick a top, a bottom, or anything else is a loser’s game. We all know the evidence is irrefutable. So our answer to you is: do nothing. Changes to your portfolio should only happen when cost savings are practical, when we rebalance, or when a life event occurs. Otherwise, stay the course. Fear and greed ruin portfolios. Disciplined long term investing is the key to success.

Cheers,

John & Bill