Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thanks for the invite. Appreciate it.
Brandy Auterson-Hurst:
So should investors be concerned about putting money to work when the stock market is near all-time highs?
David Nelson:
Well, it’s a very common concern that people have. It feels psychologically like you’re going to be buying at the top, and that’s something that most people obviously don’t want to do. But the reality is, in the chart that I brought along today, will give us a good description as far as actually the numbers behind the belief systems.
And that is that it’s comparing the S&P 500 when it reaches the all-time highs versus all other trading days. And as you can see, one year later, the average return of the all-time highs is 9.5% compared to 9.2 for all other days. Over a three-year period, the gap actually widens. And on a five-year basis, the market gained 55% following all-time highs compared with 51% for all other days. So I think the takeaway is pretty simple. All-time highs might make investors nervous, but historically they haven’t been a very reliable indicator or a sign as far as a big drop that’s coming down the line.
Brandy Auterson-Hurst:
Are there any other lessons here that viewers at home should know about?
David Nelson:
Well, kind of similar, I guess, from the standpoint of waiting for a better entry point, which is, again, most people find themselves doing. If I just hold on maybe a little bit here, we can get a better entry point. But I think the data basically trashes that concept. And so it’s a pretty risky strategy and something that we certainly don’t recommend for folks.
Brandy Auterson-Hurst:
All right, David. Thanks as always for your insight today. If you missed any of our discussion, we’ll make it available for you on ourquadcities.com.
Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.