The S&P 500 Price Index closed above 5,000 for the first time in history on February 9, 2024, marking the 10th record close of the year and its third 100 point milestone. Articles praising this achievement have flooded the media, with some calling it a landmark moment while others point out the arbitrariness of such milestones. Despite differing opinions, the general advice remains to rebalance in all markets to navigate the volatility.
The markets have historically trended upward, with periodic corrections, bear markets, and crashes. Despite these setbacks, the S&P 500 Price Index consistently crosses new highs and eventually never falls below that value again. This pattern has held true for centuries, illustrating the long-term profit potential of the markets. The recent milestone of crossing 5,000 serves as a reminder of the market’s resilience and potential for growth.
Looking back to December 2019 when the S&P 500 crossed 3,200 for the first time, it has since crossed that value multiple times amidst bear markets and corrections. The average number of times the index crosses a new hundreds value is 22, taking nearly 4 years to complete. This short-term volatility highlights the importance of having a long-term investment strategy, with a recommendation of holding 5 to 7 years of safe spending in bonds.
If the recent 5,000 point high for the S&P 500 is in line with historical averages, the index is expected to trade up nearly 10% at 5,489 a year from now. The index will likely cross 5,000 multiple times before permanently staying above that level, with the next milestone projected for December 2027. Investors are urged to understand and embrace market volatility as a normal part of the investment journey, rather than a cause for alarm or concern.
The S&P 500 has crossed the 5,000 high watermark seven times as of May 2024, further solidifying its climb into record territory. Investors should remain vigilant and monitor their investments to ensure they align with their long-term goals and risk tolerance. With the markets continuing to forge ahead, it is essential to stay informed, stay diversified, and stay the course amidst the market’s highs and lows.
The milestone of crossing 5,000 on the S&P 500 Price Index signifies a historic moment in the market’s trajectory, reflecting its long-term upward trend. As investors navigate the volatility and uncertainty of the markets, the advice to rebalance and maintain a long-term perspective remains paramount. With the potential for further milestones ahead, staying informed and disciplined in investment strategies will help investors weather the inevitable fluctuations in the market.
