In recent times, it seems all stocks can do is climb. A logarithmic chart of the S&P shows a laser-like focused momentum since the financial collapse of 2008. As we’ve mentioned before, a rising tide lifts all boats– if you were to invest in the S&P at the February 2009 lows, you would have a CAGR of 15.4% for the past 10 years. $100k would climb to $472k if you never touched your investment.
This begs the question: Where can we go from here? In the months recovering from the financial crisis, interest rates were dropped to record lows to aid in the recovery. It has been postulated that with negative interest rates, the recovery may have been vastly accelerated, rather than an underwater period of nearly four and a half years. The Fed raises rates for the first time in almost a decade at the end of 2016, only to subsequently start lowering again in 2019.
With a continued manipulation of markets by the Fed to continue this uptrend, the answer to the initial question is “Indefinitely”. We are in an environment where the Fed is dead set on keeping the market green and growing. When we truly lose faith in the Federal Reserve is when the end of times will come for our market. And as it stands right now- there is no end in sight.
The takeaway here is that the trend is your friend. Do not load up on a portfolio that is trying to buck the current Bull market. This will afford you massive losses. Hedge your portfolio like you would any other environment. Invest with downside protection in mind. And do not let your mental barriers get in the way of portfolio greatness.