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How often is the Stock Market at ‘All Time’ Highs?

Home MoneyHow often is the Stock Market at ‘All Time’ Highs?
How often is the Stock Market at ‘All Time’ Highs?

How often is the Stock Market at ‘All Time’ Highs?

July 17, 2017 Posted by Tim Kim Money, Musings 60 Comments

We hear it in the news quite often these days:

“The stock market is at “all time highs!! Move to cash!!”

But have you ever thought about exactly how often the market’s at “all time highs?”

Maybe it’s not that uncommon.

Since 1950 to now, roughly 1 out of every 15 days the market was open, it has closed at a new high level (roughly 6.7% of all trading days).

The S&P 500 has spent roughly 32% of its life within 5% of its (up to then) all time high and 24% of its life within 2% of its (up to then) all time high. That’s often!

See below for what kind of returns we experienced following an all time high, for the past 100+ years in the US stock market:

The Take Away

Yes, absolutely the stock market is at all time highs. This is the second longest bull market in the US market’s recorded history. But during an extended bull market like we’re in, by definition, it’s constantly making new highs. More often than not, highs, follow even more highs!

Does this mean that we can be rest assured that there is no bear market on the horizon? Well, that’s not true either. Of course there’s a bear market in the horizon! But no one knows when the next bear will hit. So until then, it’s important not to be fearful of the market being at high valuations. Keep plowing in, stay diversified, and don’t attempt to time the market!

“If you think the market’s “too high” wait ’til you see it 20 years from now.” – Nick Murray

What are you currently doing with your portfolio? Are you putting money in or staying on the sidelines? Any thoughts on where the market is headed from here?

 

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About Tim Kim

Timothy S. Kim is an entrepreneur, blogger, investor, social media consultant and influencer, and author that has been featured on CNBC, Business Insider, HuffPost, MSN Money, Yahoo Finance, and many other national media outlets, publications, and dozens of radio stations nationwide. He comes from humble beginnings as a missionary/pastor's kid. He was born in South Korea but lived most of his life growing up in post-communist Hungary since 1991 due to his parents’ missions work there feeding the homeless, working with under-privileged children, visiting prisons, and serving in gypsie slums as Christian missionaries, which they still do to this day. He is a “self-made millionaire” but strongly believes he’s more “God-made” than “self-made” because of the blessings that has allowed him to immigrate to the USA in 2004 to build a future for himself and his now budding family. He currently lives in Southern California with his wife, son, and Max their loyal and friendly Argentine Mastiff.

    60 Comments

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    • Lance @ My Strategic Dollar
      · Reply

      July 17, 2017 at 8:19 PM

      Agreed! No telling when the market is going to drop. Until then, keep investing! Thanks for sharing!

      • Tim Kim
        · Reply

        Author
        July 17, 2017 at 8:23 PM

        Yep, exactly Lance! Thank you for reading!

      • Saffi
        · Reply

        August 29, 2017 at 10:44 PM

        I’m still paranoid that we’ll have a huge crash and I’ll lose lots of income and whatever I have on collateral.

        • Bradley @ passiveincomeblogger.com
          · Reply

          September 2, 2017 at 7:40 AM

          Saffi, remember you will only lose if you sell! If you don’t sell you only have a paper loss. The key to coming out of a market crash intact is to not panic sell your assets! Evaluate them for sure, as some may require selling. During the 2008 financial crisis I sold *nothing*. I was only buying more.

        • Frank
          · Reply

          September 3, 2017 at 11:48 AM

          thats was my only fear while investing, i was afraid when the market was going to drop but now , i am not, i believe we cant gain all times and even if the market drops, its still going to rise and we will cover up all lost

      • Katrina
        · Reply

        September 27, 2017 at 5:20 PM

        Yes! But i think as much as i want to go all in it’s still risky not to think of the expected bear season. I guess go at your risk rolerance level.

    • Lily He-Prudhomme
      · Reply

      July 17, 2017 at 8:22 PM

      Kudos on the post Tim, I listen to Bloomberg sometimes during my rounds and everyday it’s like “all time high this, all time high that.”

      I mean a year ago it was all time highs and I remember this billionaire oil tycoon being interviewed said he’s sitting on all cash now. He took it out of the market. Then the market increase 20%. Let’s interview him again! :p

      • Tim Kim
        · Reply

        Author
        July 17, 2017 at 8:24 PM

        LOL!! The guy got owned. We’ve been hearing “all time highs” for the past 4 consecutive years!

      • Katrina
        · Reply

        September 27, 2017 at 5:44 PM

        At least he’s a billionaire. He can live with that cash for a lifetime if he is smart.

    • Ms. Frugal Asian Finance
      · Reply

      July 17, 2017 at 8:43 PM

      Oh my I love the pic lol. That Economy man looks so sad next to the raging bull! I’m risk-averse when it comes to investing.

      Right now, we are trying to pay off our mortgage and will invest in our retirement once Mr. FAF starts his new job early August. I didn’t know the market was at all time highs so often. I agree with you we need to be careful. An all time high followed by an all time low can deal a blow to your portfolio.

      • Tim Kim
        · Reply

        Author
        July 17, 2017 at 8:57 PM

        Yes, it can. But I’m optimistic! Long-term you’ll make money in the market. Barring a Japan scenario. But that’s also why I espouse global diversification! Thanks for reading!

    • Palmetto Millennial
      · Reply

      July 17, 2017 at 8:51 PM

      The saying of “All Time Highs” is like every news story being “Breaking News!”. Just combine the two together….oh wait…

      As an investor, I hope for the best and try to at least be prepared for a downturn. From your charts, it looks like a 70/30 chance for additional All Time Highs. Bring It On!

      • Tim Kim
        · Reply

        Author
        July 17, 2017 at 8:59 PM

        Funny! Yeah again, I’m not trying to predict anything in the short term. But it should be obvious from all my posts that I’m a perma-bull! Long-term, equities is the way to go. Thanks for reading!

      • Frank
        · Reply

        September 3, 2017 at 11:52 AM

        you are right palmetto, as much as we always want to gain, we should also be prepared for a downturn, i fully agree

        • Bradley @ passiveincomeblogger.com
          · Reply

          September 18, 2017 at 11:49 AM

          How are you going to prepare for a downturn Frank?

          • roco
            · Reply

            August 27, 2018 at 11:04 PM

            You prepare for a downturn by having some spare cash, and when the downturn comes you load up on stocks.

    • MrDoublingDollars
      · Reply

      July 17, 2017 at 9:25 PM

      I’ve seen an uptick in negative articles about the stock market lately. Not that it affects my investing. Heck, I just dropped $1,200 of accumulated money into the stock market today.

      All one really has to do is look at a long term stock market chart. That crash in the late 80’s? Ain’t nothing but a tiny blip. I would expect in 30 years any upcoming bear market will look about the same.

      Keep accumulating!

      • Tim Kim
        · Reply

        Author
        July 17, 2017 at 10:06 PM

        Yeah same here. Im seeing a lot of press saying that the markets are on the precipice of going down because of high valuations. But bull markets don’t just die of old age. My money’s in the market! Thanks for reading!

    • Grant @ Life Prep Couple
      · Reply

      July 18, 2017 at 12:26 AM

      Never heard that quote but that is perfect. I will be sure to remember that one.

      I am staying heavy in stocks as I’m not overly concerned about a downturn. In fact I would like to buy some shares on sale.

      We are waiting/hoping for a real estate correction. We are in no hurry to move out of our current home but should the market drop we will be buying a new home and turning this one into a rental.

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 7:41 AM

        Nice! I have a feeling there will be a real estate correction. In our area, I’m thinking in 2018. But until then, it’ll continue to go up imo. Thanks for reading!

      • Bradley @ passiveincomeblogger.com
        · Reply

        September 2, 2017 at 7:43 AM

        What kind of home do you live in now Grant? I had always thought of doing that as well (I have a single family home), but what I have learned since is that if you want to get into rental properties and you are considering buying a second house and renting out the first: sell that first house. Take the equity and buy more rental properties (ideally multi family) with 20% down from the sale of your first home. You will increase your leverage for sure, but if you do it right you can greatly increase your cash flow and net worth.

    • Josh
      · Reply

      July 18, 2017 at 2:41 AM

      Up and to the right. But I have personally been adding a bit of my new cash to bonds, mostly because I was at a dismally low 3% bonds in my portfolio. I’ll probably settle in at 90/10.

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 7:43 AM

        90/10 is still very aggressive! Personally I’m at 100/0; but I think the safest, yet without sacrificing a ton of returns is 60/40. But I’m too greedy to be at 60/40 lol. Thanks for reading!

    • Mrs. Adventure Rich
      · Reply

      July 18, 2017 at 3:58 AM

      I’m currently doing what I always do… investing via my 401K and HSA and ignoring the hype 😉

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 7:43 AM

        Nice, that’s the best thing to do! Stay the course! =) Thanks for reading!

    • Derek
      · Reply

      July 18, 2017 at 7:08 AM

      Really interesting stats. I wouldn’t have guessed it would be that high but makes sense.

      I’m on board with riding this wave as long as it lasts. Holdings in a moderate risk portfolio over the last few years will have earned enough that you could easily weather the start of a downturn before reallocating your funds and still come out well ahead.

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 7:44 AM

        Right. The thing with market timing is, you need to be right twice. When to get out, and when to get back in. The market could be up another 30% before there’s another 20% down-turn. So you’d still have missed out on 10%! Thanks for reading!

        • Katrina
          · Reply

          September 27, 2017 at 5:49 PM

          I think hopefully I won’t cash out when the bear cones. Hopefully I am emotionally strong enough to ride it out. Because the market always bounce back anyway.

    • Zack
      · Reply

      July 18, 2017 at 10:15 AM

      You are absolutely right. I think Millennials especially have to get over the fact that investing is risky but it’s something we need to be doing if we want to have a secure retirement. Great article!

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 6:56 PM

        I think they’re coming around to it. Many of the people in the millennial cohort I know are invested! We are lagging a bit behind though as a group. Thanks for reading!

    • Our Frugal Escapades
      · Reply

      July 18, 2017 at 11:14 AM

      The stock market is so unpredictable, but at least history is on our side. With that said, we will take the bull market while we can get it, and hope that a crash doesn’t happen to soon!

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 6:58 PM

        It is unpredictable. It’s a random walk. Sometimes I kinda want a severe crash. The more you’re in your earning years, it’s better to buy stocks at a discount. The worst thing would be to buy at a tremendous peak and have it crash towards retirement; or even worse in the early years of retirement, that is by far the worst (sequence of return risk). Thanks for stopping by!

        • Bradley @ passiveincomeblogger.com
          · Reply

          September 2, 2017 at 12:58 PM

          One of my friends is always worried about buying at the peak near retirement as well. I always remind him that if he is investing regularly, the size of the investment that he makes towards the latter years of his career (just before retirement) should be peanuts compared to the size of your portfolio, so it won’t matter much in the end.

          And if that’s a fear, you can always purchase bonds and fixed income products in those last years to make sure the last investments you make before retirement don’t tank. Or start selling stocks leading up to retirement and changing your portfolio weighting to be more heavily in bonds.

        • Frank
          · Reply

          September 3, 2017 at 12:01 PM

          obviously tim, you will be filled with hate and its going to be horrible when you have your stocks crashing at the time of retirement, thats probably the worst timing

          • Bradley @ passiveincomeblogger.com
            · Reply

            September 18, 2017 at 11:51 AM

            Since historically, all markets recover, a crash as you enter retirement should not be that bad. You might deplete your assets at a rate faster than you were expecting, but if you transition to a heavier weighting in bonds and don’t sell the equities during the downturn, you should do ok.

    • Kris
      · Reply

      July 18, 2017 at 11:49 AM

      Keep investing whenever you want. Do not rely on whether the bear market is coming soon, it doesn’t matter. As long as your portfolio is diversified it will survive the attack of the bear and you will slowly hold onto the bull’s horn. Haha, i just made that last sentence up.

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 6:59 PM

        Lol, agreed! I’m BIG on diversification. Especially global diversification because both developed-EX-US and emerging markets are trading at healthier valuations. Thanks for reading!

    • Meow
      · Reply

      July 18, 2017 at 1:00 PM

      Yep- the high percentage of days the market spends at an “all time high” makes a lot of sense when thinking about the average return of the market over many many years. Think of it this way: you’ve never been as old as you are right now. Does that mean you have any higher chance of being younger tomorrow?

      • Tim Kim
        · Reply

        Author
        July 18, 2017 at 7:01 PM

        That’s a great way to look at it too, since time is the greatest factor! The sooner we start, the longer we can have compounding work for us! Thanks for reading!

    • Miguel @ The Rich Miser
      · Reply

      July 22, 2017 at 1:37 PM

      Great points, Tim. History shows that the long-term, “secular” trend is always up; it follows that long-term money will do well in a broad basket of stocks (like an S&P 500 fund).

      Are you a fan of the “lifecycle” funds that gradually move into bonds as the target date approaches? It seems like a good idea in that I would not want to be too much into stocks in the years or months before retirement, since a severe correction or bear market could do serious damage close to retirement.

      • Tim Kim
        · Reply

        Author
        July 22, 2017 at 1:48 PM

        Thanks Miguel. Yeah I often recommend people just go with one of those life cycle target retirement date funds. Although you can replicate the same thing and pay less fees with index funds. I agree that more bonds in retirement is important. But one other thing to keep in mind is that retirements are getting longer for people these days because people are living longer, so you still need a healthy amount of stocks in order to not run out of money.

    • Sam
      · Reply

      August 21, 2017 at 6:35 PM

      Richard Kawasaki has been recently pushing forward another crash that is coming as stated in this article: http://www.marketwatch.com/story/rich-dads-kiyosaki-hasnt-given-up-on-his-dismal-market-prediction-2017-02-28
      Can I ask for your input?

      • Tim Kim
        · Reply

        Author
        August 21, 2017 at 10:50 PM

        Even a broken clock is right twice a day. Try to tune out what people say in the media. Because no one really knows. Do people make valid points? Yes. But at the end of the day, no one can predict the future. Is the market high, relatively-speaking? Yes, it is. For a fact it’s fairly high. But who knows if it’ll crash tomorrow or 2 years from now. If the market rises another 30% in the next 2 years and then drops 20%, you’re still up 10% compared to the guy who was waiting for the crash before putting the money in.

        • Sam
          · Reply

          August 25, 2017 at 8:24 PM

          Both you and Bradley make solid points. It’s a learning process that will likely take the bumps along the road in order figure it out. This might be a silly question but do you have a ‘stop loss’ option for ROTH IRA funds?

          • Tim Kim
            · Reply

            Author
            August 27, 2017 at 7:58 PM

            No, not for index funds. You kinda don’t want to play that game though, anyways, with your retirement account. You don’t want it to sell when it’s getting hit. You’re much better off riding it out for the long haul.

            • Frank

              September 3, 2017 at 2:29 PM

              With politicians crowing about an “all-time high” stock market, I was thinking about how the stock market almost always goes up…. so it must be pretty frequently at an all time high.
              Obviously, after big crashes like in 08 it took years to get back to an all-time high. But since, say, 1900 how many times has the DOW or S&P 500 hit a new high?

            • Bradley @ passiveincomeblogger.com

              September 13, 2017 at 12:49 PM

              Thanks for “your” opinion Frank.

              https://www.reddit.com/r/investing/comments/6rnw15/how_many_years_has_the_stock_market_hit_an_all/

            • Katrina

              September 27, 2017 at 5:51 PM

              Thanks for the advice. Since I am still far from retiring i can ride out the market drop. Just work more for me i guess and keep on investing and saving because the power of compounding will eventually work for us.

          • Bradley @ passiveincomeblogger.com
            · Reply

            September 2, 2017 at 1:00 PM

            I don’t do stop losses either, on indexes or stocks. I prefer to evaluate each market change (or company pull back) on a case by case basis. There are a number of times the stocks I own have been hurt b/c of some news. If I had stop losses on them, I would be out and would not have caught the rebound.

      • Bradley @ passiveincomeblogger.com
        · Reply

        August 22, 2017 at 7:19 PM

        One of the hardest parts of investing (IMO) is learning how to form your own opinions. For every prediction or theory you read from an author, there will always be a counter argument or opinion. Often the differing opinions make sense and each has valid points to support their case… in the end, you have to form your own opinion based on the information you absorb. With that in mind, try to read more than just articles that support what you want to do, as that can lead you to falsely supporting your own original theory / idea (by excluding other opinions).

        My wife’s financial adviser has been cautioning me for two years that a crash was imminent. He also predicted a crash if Trump won the presidency. Had I listened to his advice, I would not have invested any new money in the last two years.

        In the end, I think if you don’t attempt to time the market (ie holding off until the next crash) you will do just fine.

        • Tim Kim
          · Reply

          Author
          August 23, 2017 at 9:59 PM

          That last point. 100%. I heard a saying, “nobody knows thing.” Grammatically poor, but it absolutely is true. Even all the “pros” all contradict themselves. And they disagree with each other.

      • Frank
        · Reply

        September 3, 2017 at 12:24 PM

        thank you sam for sharing the article, this is also a great one i saw undernesth http://www.marketwatch.com/story/robert-kiyosaki-says-entrepreneurs-should-read-this-book—-it-will-talk-to-your-soul-2017-02-28

    • Bradley @ passiveincomeblogger.com
      · Reply

      August 22, 2017 at 7:30 PM

      While I am not on the sidelines in this market, I am not investing in my portfolio as heavily as usual. I invest monthly (as I’m sure a lot of you do) primarily in US and Canadian dividend stocks. But when I do a quick analysis on my watch list to see what I want to buy, if there are no stocks that are standing out to me, I take that money and put it against our mortgage instead. Since reducing debt is a guaranteed return, it’s difficult to argue with the choice! YTD I have put more money against debt instead of our investment portfolio. The year isn’t over yet, so that ratio may not stay that way, we’ll have to see.

      • Tim Kim
        · Reply

        Author
        August 23, 2017 at 9:58 PM

        That’s a valid method Bradley. I’ve contemplated it myself quite a bit as well.

    • Saffi
      · Reply

      August 29, 2017 at 10:47 PM

      To be quite honest I’m afraid of anything that has to due with the stock market after learning about the crash of black tuesday. Anyone else?

      • Bradley @ passiveincomeblogger.com
        · Reply

        September 2, 2017 at 8:01 AM

        Don’t worry about market crashes. Look at the historical trend of the stock market. It goes up. It always goes up. So as long as you don’t sell your stocks during the crashes (when the value is low), you will do just fine.

    • Frank
      · Reply

      August 30, 2017 at 2:58 PM

      i only wonder what took us so long to know that the stock market can only go higher forever. Can’t you see? We have learned the big secret.We can simply borrow our way to prosperity and never have to pay the piper for his tune.

      • Bradley @ passiveincomeblogger.com
        · Reply

        September 2, 2017 at 8:03 AM

        I don’t think that is true Frank. Ask anyone who was over leveraged during the 2008 financial crisis. Many people lost everything and had to start over. Be careful how much you borrow. Leverage is a good way to build your financial empire, but if you do it wrong, you could lose it all.

      • Bradley @ passiveincomeblogger.com
        · Reply

        September 13, 2017 at 12:52 PM

        Frank’s comment comes from this source in case anyone is curious.

        http://www.marketwatch.com/(S(rnrsydaynixa5x55oiibxm45))/story/be-afraid-everybody-seems-to-agree-on-where-the-stock-market-is-headed-2017-08-07?link=MW_story_popular

    • Muralidhar
      · Reply

      February 16, 2019 at 1:34 PM

      Everytime we cannot predict ,stock market jumps suddenly Same time it goes down,so it’s better to invest in many stock markets,thanks for knowledge sir

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