Asset Advancer

[Asset Advancer @AssetAdvancer]

Study after study has shown that momentum stock investing typically is a market-beating strategy — but also that it isn’t foolproof. It needs to be managed well.

How has that translated into real-world results?

[Asset Advancer @AssetAdvancer]

Let your performance be carried by momentum!

[Asset Advancer @AssetAdvancer]

History says: Winners gonna win!

[Asset Advancer @AssetAdvancer]

There’s a reason momentum investing has been a popular strategy for so long: Markets that are trending often trend higher and keep trending for a while.

Knowing how to take advantage of this tendency can offer big returns.

This is what we do.

[Asset Advancer @AssetAdvancer]

Volatility is the price you pay for performance.

[Asset Advancer @AssetAdvancer]

Do not fear highs as an immediate sign of risk or even a turning point, but be aware of the historical trends after reaching high points instead! Given the fact that we’ve not seen new all-time highs for a while, it might still be early...

[Asset Advancer @AssetAdvancer]

So, in short, don’t fear all-time highs but instead, understand what they signify. Record levels are usually not the beginning of a fresh cycle but are part of an ongoing process or the culmination of a market cycle.

[Asset Advancer @AssetAdvancer]

The likelihood of making money was 83% for investments held over a 12-month period and 88% when invested at all-time highs.

[Asset Advancer @AssetAdvancer]

Long-term investors should anticipate experiencing numerous all-time highs throughout their investment lifecycle, understanding that while some may presage market crashes, most will lead to further highs.

[Asset Advancer @AssetAdvancer]

The stock market generally trends upwards over time, explaining the prevalence of new all-time highs.

[Asset Advancer @AssetAdvancer]

While corrections are inevitable, long-term investors should remain confident, recognizing that recent highs likely won't be the last.

[Asset Advancer @AssetAdvancer]

Behavioral biases play a role in market cycles—investors often hold onto losing stocks too long and sell winners too early, which can lead to underreaction followed by herd mentality overreactions, propelling overshoots.

[Asset Advancer @AssetAdvancer]

Data from JP Morgan demonstrates that investing on days when the S&P 500 hit all-time highs had an average total return of nearly 15% a year later, versus just under 12% for any given day since 1988.

[Asset Advancer @AssetAdvancer]

While investing strictly at all-time highs can coincide with market crashes [such as in 2007], typically, new highs suggest bullish trends.

[Asset Advancer @AssetAdvancer]

Clusters of new all-time highs have frequently occurred during bull markets. For example, in the 1990s and from 2013-2019, they made up over 12% and 14% of trading days, respectively.

[Asset Advancer @AssetAdvancer]

Markets are cyclical, influenced by human emotions, and tend to overshoot during both upturns and downturns.

[Asset Advancer @AssetAdvancer]

All-time highs in stock markets may seem daunting to investors due to the fear of “impending bear markets”, but historically, they often simply signal more all-time highs to come.

[Asset Advancer @AssetAdvancer]

Market trends suggest that these all-time highs are not outliers but part of a persistent trend, driven by herd mentality in investment behaviors.

[Asset Advancer @AssetAdvancer]

Research into market trends since 1929 reveals that all-time highs usually cluster over many years.

[Asset Advancer @AssetAdvancer]

Historically, new peaks often lead to further highs, as seen when 52 more highs followed the new peak in March 2013.

[Asset Advancer @AssetAdvancer]

Even though investors often hesitate at the prospect of market highs, fearing the only direction left is “downward”.

As of early 2024 where the S&P 500 reached a new all-time high, it’s rather signaling opportunity than impending decline.

[Asset Advancer @AssetAdvancer]

Don’t Fear All-Time Highs, Understand Them!

All-time highs in the stock market are usually followed by… more all-time highs!

Yes, that’s correct.

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