The writing has been on the wall for the last week, but with today’s (October 31, 2017) 1:00 p.m. closing, the S&P 500 Index has just experienced its longest monthly positive total return winning streak since 1950! To give you a sense of how long ago 1950 was, from 1950-1957 the index was actually called the S&P 90.
During both 1954 and 1959, the S&P Index experienced 11 months of positive total returns. As of today, there is a new record: 12 months. We will have to wait for November 30, 2017 to see if the streak stretches to yet another record-breaking 13 months.
Although this news is all over the financial headlines, the truth is that there is nothing special about where the market closes on the first day of any given month. Or the last day of any given month. There is no reason we should be in awe of monthly or daily return numbers. Where the market closes should not be a source of concern or excitement. It’s just a thing that happens a few hundred times a year.
Of course, it is a thing that does generate a number of headlines that fall into two basic categories
- “Wow, market momentum is great, “
- “Uh Oh, this thing is going down.”
Neither of these headlines is helpful to a long-term investor, in my opinion. It’s “noise” you can just ignore, because it means nothing for your retirement plan. The only numbers that really matter to you are the ones related to the period of time between when you start investing and when you stop investing any particular sum of money. For retirement, this is certainly far longer than a 12 month period.
Don’t let the headlines guide you off course. Stick to your plan, during market winning and losing streaks.