The stock market has seen a strong start in the first five months of 2024, with the S&P 500 index rising by 11.2%, marking only the third time in the past 25 years that there has been an increase of at least 10% by the end of May. This level of return is significant considering that the average annual increase for the S&P 500 is around 9.5%-10%. The optimism in the capital market is fueled by factors such as the artificial intelligence revolution and the hope for interest rate cuts by central banks.
Looking back at the past 25 years, there have only been two instances where the market performed better during this period, in 2021 and 2013. While market analysts may have predicted a modest rise in the index for 2024, the actual performance has exceeded expectations, reaching new record levels in a short period of time.
Trying to time the market based on predictions can be risky, as trends can change rapidly and investors may miss out on potential gains. Legendary investors like Warren Buffett advise against trying to predict market movements and emphasize the importance of staying invested in the long run.
Despite the uncertainty in the market, new highs are not uncommon, and historical data shows that breaking record levels is a regular occurrence. As the market continues to reach new peaks, investors are reminded of the importance of maintaining a long-term investment strategy rather than attempting to time the market based on short-term predictions.