25 Jan 2024 Market High Soup For The Soul
Major stock indexes hit all-time highs over the last week, following a calendar year in 2023 where the S&P 500 was up nearly 25%. Bonds will take a bit longer to recover as rates continue to “normalize.” A decade-plus run-up in bond prices (while rates fell to zero), followed by the drop in prices over the last couple of years (as rates came up in rapid succession) will do that to you. But hiring is strong, inflation continues to fall, and the economy continues to grow. Thus the all-time highs.
And nothing about your life changed. Your brother-in-law still has a scary surgery on Tuesday. Your kids are playing the piano badly in the hall. The front door still needs to be fixed. The emails keep coming.
Markets are important because they enable people like you and me to benefit from the ownership of companies that, over time, have done really well in the aggregate. And this historical reality has enabled people to maximize their savings so that when they cannot work or choose not to work, they can still live their lives and afford the things that cost money along the way.
So yes, when markets go up and achieve some new threshold, it’s nice in a symbolic sort of way. It is perhaps a welcome validation that investing “works.”
But the fact that your life kept on in much the same way as markets hit new highs is a helpful reminder that, done properly, investing should work in the background. It shouldn’t change your life, not on a day-to-day basis certainly. Because on a day-to-day basis, the line between what is mundane and what is “the main thing” is vanishingly slim. Your brother-in-law and the hideous music in the hallway and what simply needs doing right now are all the stuff of life. To allow the daily whims of impersonal markets to interrupt those rhythms of family and work and play and rest is to court a sort of unhealth, to forge a chain not unlike those of Jacob Marley and Ebenezer Scrooge.
When we work with clients to keep markets (and many other financial topics) in the background of their lives, we are not saying they don’t matter. They matter a great deal! But we are more interested in helping them matter in healthy ways, toward healthy ends, so that clients are free to be present to the richness of life—in all of its beauty, terror, and mundanity—rather than chained to something called the “S&P 500.”
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