President Dwight Eisenhower once said "what is important is seldom urgent and what is urgent is seldom important." This perfectly describes the challenge many investors face. Every day brings new market news that feels urgent and important. This year, investors have worried about tariffs, global conflicts, and economic problems.
But the most important investment decisions are not the urgent ones. They are the ones made with patience and a long-term view. The key factors for building wealth - staying disciplined, saving regularly, and letting your money grow over time - require planning and commitment, not quick changes.
Despite a tough start to the year, the stock market has reached new record highs. The S&P 500 (a measure of 500 large US companies) and the Nasdaq (a tech-heavy index) recently hit new peaks. This shows why it's important to focus on long-term trends, not daily market moves.
New market highs happen more often than you might think
It's normal for the market to reach new highs. Since markets generally go up over long periods, bull markets (when prices are rising) spend much of their time at record levels. This doesn't mean the market only goes up - there are still ups and downs along the way.
The chart shows how often new highs happen. From 2013 to 2024, the S&P 500 hit new record highs on about 37 days per year on average. That's about 15% of all trading days. Last year alone, there were 57 record closing days, even with many investor worries about recession and the presidential election.
This happens because when the economy grows, the stock market tends to rise with it. Since the mid-1900s, bull markets have lasted much longer than bear markets (when prices fall). This has helped investors who stick to their long-term plans. So new all-time highs are not necessarily a reason to worry or a sign that the market is about to fall.
Bond markets have also done well recently
Bonds (loans to companies or governments) have also performed well, especially corporate bonds (loans to companies). When the economy is stable and stocks are strong, investors feel more confident that companies can pay back their loans. This makes bond prices rise.
The Bloomberg U.S. Aggregate Bond Index (a measure of many different US bonds) has returned 3.7% this year. Corporate bonds have also returned 3.7%, while high-yield bonds (riskier bonds that pay more) have returned 4.3%.
This reminds investors that while the stock market gets the most attention, other investments have also helped portfolios this year. With the S&P 500 at record highs, it's a good time to review your mix of investments.
Having a balanced mix of investments is still important
While both stocks and bonds have done well, it's still important to maintain a balanced portfolio. Building a portfolio isn't just about returns - it's about balancing risk and returns to meet your long-term financial goals.
The chart shows how different mixes of investments perform in good and bad times. Portfolios with mostly stocks may do better when markets are rising, but they also fall more during downturns. Including bonds can make the ride smoother and help ensure you meet your financial goals.
Which approach makes sense depends on how much risk you can handle and what returns you need. Having a clear view of your goals helps you build a portfolio that can handle the next period of market volatility.
The bottom line? While the market has bounced back, investors should stick to disciplined investing rather than chasing recent performance. History shows that staying invested through market cycles is the best way to reach long-term financial goals.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. Financial planning offered through M Financial Planning Services, a Registered Investment Advisor and a separate entity.
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