On June 12th the S&P 500 closed at a new 52-week high for the first time in 525 calendar days. This is the 25th time that the S&P 500 has reached a new 52-week high after a long pause of 300 or more calendar days.
Historically this has been a positive for forward returns. There is a lot of data in the chart below, but to pull just one example the average 250-day forward return after such an event has been 15.48% compared to 7.74% for all periods.
Our base case view on stocks has been that the market would need to trade in a wide sideways range for an extended period as it digests much of what has occurred in recent years, as part of a normalization. However, the data above reminds us that like we often tell others, we also need to stay open minded to a variety of potential outcomes. This market has been much stronger than most anticipated. So far this year much of the move has been driven by a small number of large technology related stocks. If the strength was to broaden and more stocks begin to participate investors could continue to be surprised to the upside.
No one knows how the months, or even years ahead will play out. There are plenty of factors to be concerned about that could still bring down the stock market. By investing with a long-term and disciplined process investors will be best positioned to benefit from further upside, while helping to avoid emotional decisions during the occasional negative periods.