It’s been a splendid run for the market — so emphatically great that in just the first three months of the year, the S&P 500 index climbed to record highs on 22 separate days.
Shiller can’t be more precise for another month or two because the consumer price index is calculated retrospectively, while stock prices are virtually instantaneous. On his Yale website he posts monthly inflation-adjusted stock, bond and earnings data. The last inflation-adjusted peak for the S&P 500 was in November 2021.
That makes it imperative for long-term investors to diversify their holdings. He takes the same investing approach recommended in this column: using cheap index funds to hold the entire stock and bond markets, and hanging in for decades.Inflation aside, the start of the year has been brilliant for stock investors. Most quarterly portfolio updates will reflect recent gains.
Among domestic funds specializing in sectors of the stock market, technology funds were a standout, with an average return of 13.6% for the quarter and 42.6% over 12 months.It’s always possible to do better than average, by putting all your money into the best performing stock or stocks. Risk-takers who went all in on Nvidia stock, for example, gained 82.5% for the quarter and 235% over the 12 months through March.
But those moves seem far too risky for money that I’m going to need one day. Instead, I took the long-term, diversified approach, which doesn’t look nearly as good over the short-term.