Record High in Stocks… Time to Sell?

The 100-year-old Dow Jones stock index hit a record high for eight consecutive days, ending Friday.

It was a remarkable streak. After such a run, you’re probably wondering, “Is it all over? Shouldn’t stocks be near a peak now? Should I sell?”

My answer to all those questions – as I’ll explain – is a resounding “NO!”

[ad#Google Adsense 336×280-IA]Stocks are NOT near a peak now – far from it.

Based on 100 years of history, instead of selling, you actually want to buy stocks now.

That’s because, after stocks have a good quarter, they normally have a fantastic NEXT 12 months.

The first quarter of this year has been fantastic.

Stocks are up by double digits, percentage-wise – up 11% year-to-date. It is the best first quarter since the 11% gain in the first quarter of 1998 and the 11% gain in the first quarter of 1991.

Based on history, the next 12 months should be pretty darn good for stocks…

I used our True Wealth Systems database to look back at 100 years of data. Here’s what I found:

If you’d bought the stock market (the Dow) any time the index rose 10% or more in any quarter, stocks rose 9.4% over the NEXT 12 months. That crushes a buy-and-hold strategy, which only returned 5.5%. (These num­bers don’t include dividends.)

And if you bought the Dow after a bad quarter, you would underper­form over the next 12 months.

You can see the exact numbers right here:

So the short answer is, you WANT to own stocks after the Dow has a really strong quarter, like it just did. It means outsized gains are more than likely over the next 12 months…

You might think it’s scary to buy stocks after such a great run recently, and such a strong first quarter of this year.

Of course, in the short term, a pullback is possible. But you shouldn’t be concerned with the short term. You should be looking a year ahead.

A hundred years of history tell us that a strong quarter for stocks is a good sign – not a bad one – for the next 12 months.

In short, there’s no need to sell because stocks are up…

Good investing,

Steve

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Source: DailyWealth