All Time Highs Are Bullish

“One of the most bullish things that can happen to any market is for it to reach new multi-year highs.“   Bloomberg, March 5, 2014

Markets closed at a new all-time high today.

The usual suspects have already proffered their litany of horrors – valuations are too high, gains are too narrow, we havbe market concentrated and a toppy feel, to say nothing about all of the new geopolitical risks that continue to accumulate in tariffs war and oil prices.

The problem is that the data simply does not back up their fears:

“Consider the actual historical data. New highs occur very regularly during bull markets. This makes the crash insistency much less compelling. Indeed, we tend to see many more new highs during the secular bull markets than we do during the bear cycles.”

A column I wrote for Bloomberg in 2014 pointed out that the Dow made 492 new all-time highs from 1982-1999; in the 12 years covering 1952 to 1965, it made 279. Admittedly, the last all-time high always takes place before a bear market. But the data shows that if you invest during all time highs, you do better than you would if you’re investing randomly on any other day in a market cycle (see chart at top).

You might be wondering when to skip an all time high, but making that bet seems like a fool’s errand. Note we were having this same discussion 11 years ago; consider howe disastrous selling the 2014 all-time highs 9pandemic and all) would have been.

Yes, it’s true: To avoid that very last all time high, the 479th ATH, you would have had a miss a substantial number of the 478 prior highs that preceded it over the prior 16 years or so.

That seems like a terrible bet to me…

Previously:
No, Market Highs Are Not a Bad Sign (March 5, 2014)

See also:
All-Time Highs in the Stock Market are Usually Followed by More All-Time Highs (A Wealth of Common Sense, February 8, 2024)

Nothing is More Bullish than All-Time Highs (The Irrelevant Investor, February 03, 2024)

Should You Buy An All-Time High? (Dollars & Data December 29, 2020)

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