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The S&P 500 Just Did This for the First Time in 13 Years. Here’s What History Says Happens Next.
The S&P 500 (SNPINDEX: ^GSPC) is the most widely followed stock market index in the U.S. and includes the 500 largest companies in the country. Because it contains a broad swath of American businesses, it’s also considered by many to be the best overall benchmark and the most reliable gauge of overall stock market performance.
The storied index has been squarely in rally mode since it bottomed in October 2022, driven higher by waning inflation, the advance of artificial intelligence (AI), and the Federal Reserve Bank’s long-awaited decision to begin its campaign of interest rate cuts. These factors have combined to create an environment that’s ripe for the stock market rally to continue.
The S&P 500 just delivered its best January-through-September performance since 1997 and has now entered the third year of its current bull market run, something that hasn’t happened since 2011. If history is any indicator, the current rally still has much further to go.
A bull can run a long way
Fresh off the worst bear market since 2009, investors are relishing the good times — and well they should. History shows that bull markets have more stamina and tend to last much longer than their bearish counterparts.
Since World War II, the average bull market has lasted roughly four and a half years, according to data compiled by Bespoke Investment Group. For context, that’s far longer than the average bear market, which lasts roughly one year.
That said, not all bull markets are created equal. For example, the bull market that started in 1987 ran for more than 12 years, while the bull market that began in 2009 ran for 11 years. On the other end of the spectrum, the bull market that began in 2001 lasted just three months.
The current rally just completed its second full year, so — if history holds true — this bull market still has further to run. Of the 13 bull markets that have occurred over the past 77 years, seven have lasted three years or more, so history is on the side of the bulls.
Then there’s the matter of returns. Bull markets have generated returns of 152%, on average, which bodes well for current investors. However, the market gains varied greatly, depending on the length of the rally. For example, the bull market that began in 1987 generated returns of 582%, while the one that began in 2009 returned 400%. However, the short-lived rally of 2001 — which lasted just three months — returned just 21%.
Generally speaking, the longer the bull market, the greater the potential returns. That holds true for the ongoing run as well. Looking back to October 2022 — the beginning of the current market rally — the S&P 500 has generated returns of 63%. If history holds true, the current bull market has much more to give.
Where do we go from here?
There are plenty of opinions about the market and where we go from here. Goldman Sachs Chief U.S. Equity Strategist, David Kostin, just boosted his 2024 year-end target for the S&P 500 to 6,000 while lifting his 2025 target to 6,300. This suggests that after notching 22% gains already this year, the index is poised to tack on an additional 3%. It also suggests that the S&P 500 will climb 5% in 2025.
While market prognosticators will provide their best guesses about what happens from here, the truth is no one knows for sure. If the economy keeps ticking along, and business and consumer spending hold up, the current bull market has a shot at joining some of the longer bull market runs in history.
However, things don’t always go as planned. Investors should be aware of the potential for a “black swan” event, a random and seemingly unpredictable happening that can have an enormous impact on the financial landscape. Think the 2008 financial crisis or the recent global pandemic. Many a bull market run has been derailed by a black swan.
Does that mean investors should hunker down and fear the worst? Far from it. Market legend Peter Lynch — one of the most successful investors of all time — said, “Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” This knowledge should help investors be mentally prepared for events that couldn’t possibly be foreseen.
The biggest takeaway from this exercise is that time is the biggest advantage that investors have. As illustrated by the above chart, the stock market has generated robust returns over time despite market downturns. Buying quality stocks and holding them for the long term is the best strategy for thriving in a bull market. Furthermore, continuing to add to your portfolio at regular intervals — a process known as dollar-cost averaging — and keeping it up during both bull and bear markets helps develop the discipline needed to thrive no matter what the conditions.
The stock market has returned 10% annually, on average, over the past 50 years, which helps illustrate the benefits of investing for the long term.
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The S&P 500 Just Did This for the First Time in 13 Years. Here’s What History Says Happens Next. was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
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