While you were shopping...Another incredible stock market record was set on Friday:
Bottom Line: The greatest wealth creation machine in the history of the world is the US stock market. With average returns of 10.1% per year despite its volatile history, it's a reminder about the value of having a plan, removing your emotions from it and viewing the power of compound interest.
As an example...$1 with an average rate of return of 10.1% per year is worth $20.44 in thirty years. More than 20 times its original value! Anyway, we've had the third greatest rally in the history of the stock market play out over the past year in the wake of President Trump's election. What's more impressive is the absence of any real negativity along the way. On Friday we recorded our 388th consecutive trading day without a decline of 3% or more. That's an all-time American stock market record. The previous record was set in 1995. Btw, that's a reminder for the doomsday crowd that an absence of negative volatility doesn't necessarily mean that we're going to make up for it with a terrible market going forward. In 1995 we still had five more years of stellar market returns ahead prior to the dot com bubble burst in 2000. It is an important reminder however, that what we've had isn't normal by any means and that complacency isn't a plan either. Tomorrow I'll update the market risk and values but be prepared for an end to this era of record low volatility. While we just made history, as we know, there will come a time it repeats itself with some negative volatility. What happens with tax reform will likely determine the near-term outcome of the market's volatility.