(Source for above graph: https://www.macrotrends.net/2488/sp500-10-year-daily-chart)
Today the S&P 500 hit a new high… again.
During the nine years since I started investing, the biggest investing story has been the success of big U.S. companies. Fortunately for my investing career so far, the fund I have most consistently focused on is VTSAX, the Vanguard Total Stock Market Index Fund. This fund is about 70% big U.S. companies, and the rest are smaller (but often still big) U.S. companies.
Needless to say, it’s been a good time to have a U.S. stock bias.
Nonetheless, I personally try to watch out for my own biases. One of the most problematic for many investors is recency bias, which means assuming that something that has happened in the recent past will continue to happen in the future. All investing literature reminds as that “past performance is not a guarantee of future results.” This is Behavioral Finance 101. Yet isn’t it all too easy to continue expecting the same type of performance we have been getting?
Personally, I am betting that U.S. large companies will continue to thrive. Yet that doesn’t mean I expect a smooth ride. That’s the nature of risk. There will be ups and downs. It’s important not to get complacent. We don’t know what changes the future will bring.
Still, I’m optimistic. After all,
- I am investing for the long-term.
- I have so far successfully navigated two bear markets, the 2020 Pandemic crash and 2022.*
- I hold some international investments for diversification.
As I wrote almost five years ago, I like to think that no matter what I will stay cool, calm, and collected about Mr. Market!
*In both cases, I was eager to buy on discount. Enthusiasm for buying cheaper shares has contributed significantly to the growth of my investments.