Next All Time High: "1 Day Or 25 Years?"

As DB's Jim Reid wrote in his latest Friday Thematic Research recap from the last day of the week, Thursday saw the first all-time high in the S&P 500 for a whole month.

It was nevertheless the 11th ATH in 2021 to date, and if anyone (spuriously) decides to annualize this, it would mean 57 in total for the year which would be the fourth largest behind 1995 (77), 1964 (62) and 2017 (62).

As Reid observes, such clusters of all-time highs are unsurprisingly focused around secular market valuation highs with the late 1920s, mid 1960s, late 1990s and the current period the obvious points. However, there have also been long periods where we’ve been devoid of ATHs, usually after one of these market peaks. The longest was the 6490 business days between September 1929 and September 1955.

Between March 2000 and May 2007 we went 1803 business days and between October 2007 and March 2013 we went 1376 business days.

After the 1960s peak, inflation meant we did see all a few ATHs in the 1970s but in real terms it took well into the late 1980s to hit fresh ATHs. Indeed on a nominal basis we didn’t pass the peak reached in 1968 for the last time until 1982 even as inflation climbed around 280% over the period.

More recently we seen a much more brisk ascent, if only in nominal terms, thanks to the Fed's relentless injections of liquidity. As a result, since 2013 the longest we’ve gone without an ATH was the 286 business days between May 2015 and July 2016.

And while Friday's action saw a continuation of the upward momentum in stocks as well as the 12th ATH of the year, Reid is concerned that history suggests that "there might be a point where we have to wait a decade or two for a new one"... however with a new round of stimulus checks now arriving and with US GDP set to grow at near double digits rates - and faster than China - Reid concludes that "perhaps that period will wait for a while yet."

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