What If

 

Matthew 25:25

"so I was afraid, and I went and hid your talent in the ground. Here, you have what is yours."

Despite concerns about high interest rates and recession, the stock market has soared to unprecedented heights. This surge was primarily fueled by robust corporate earnings, a thriving job market, and increasingly positive consumer sentiment. When the market experiences prolonged success or reaches new peaks, the urge to secure gains may arise. Naturally, nobody wishes to see their profits vanish. However, before making any investment decisions, it's crucial to weigh all angles.

 

Consider, for instance, the "What If" perspective: If you were to cash in on your gains, what would you do with the funds? Where would you allocate them and for how long? Moreover, determining the right time to re-enter the market adds another layer of complexity. While locking in gains may seem like a safeguard, it essentially involves timing the market, a risky and stressful endeavor.

 

Taking a historical view, data from Truist reveals that the market tends to perform admirably after reaching new record highs. Since 1954, statistics indicate that the market was higher one year after hitting a new high 93% of the time. Similarly, JP Morgan's research suggests that investing on days of all-time market highs historically yields superior returns compared to other days. In essence, historical evidence contradicts the notion that reaching all-time highs signals an impending downturn. If anything, it suggests that such milestones often pave the way for further growth.

 

In conclusion, while the instinct to safeguard gains is understandable, thorough consideration of various perspectives may reveal it to be an ill-advised decision. As the adage goes, adhering to a disciplined investment strategy is often the wisest course of action.

 

Sources:

1. Truist, Market Perspective, Jan 19, 2024

2. JP Morgan, Is it Worth Investing at All-Time Highs, Aug 28, 2020

 

Investment advice offered through OneAscent Financial Services, LLC, d/b/a Provident Oak Financial, LLC, a Registered Investment Adviser with the United States Securities and Exchange Commission. Registration as an investment adviser does not imply any certain degree of skill or training.