Stocks are at record highs: Why you should stay invested
What historical data does Tim Urbanowicz reference to support his claim that all-time highs in the stock market are not a catalyst for a sell-off?
Tim Urbanowicz, Head of Research & Investment Strategy at Innovator Capital Management, refers to historical data that shows all-time highs in the stock market are not a catalyst for a sell-off1. He mentions that the average 12-month return after an all-time high is around 12%, and 77% of the time, the market is positive6. Furthermore, he explains that all-time highs tend to cluster together, indicating that it's not abnormal to see a series of record highs in a certain period.
What impact have rising interest rates had on big tech companies, according to the discussion?
According to the discussion, rising interest rates have had a significant impact on big tech companies. These companies often make promises to investors about future cash flows and rely on research and development to deliver those results. However, as interest rates rise, investors have more options for where to put their money, such as government bonds with higher interest rates. This makes investors more impatient for future cash flows and can cause them to question whether it's worth waiting for innovation from tech companies.
As a result, tech companies might have to spend less on research and development or capital expenditures. Higher interest rates can also reduce demand for their products. The impact of rising interest rates on tech companies is expected to continue, affecting their production levels, hiring, and more.
How often has the S&P 500 reached new all-time highs this year, and what is the average 12-month return following these highs?
The S&P 500 has reached new all-time highs 30 times this year. According to Tim Urbanowicz, Head of Research & Investment Strategy at Innovator Capital Management, the average 12-month return after reaching an all-time high is around 12%, and 77% of the time, the market has been positive.