Stock Market Lifetime Highs And The Wisdom of the Crowds

From Hoarder to Minimalist

1997 was a big year for me. A lot of things changed in my mind, behavior, and attitude. I was in Hong Kong when it got handed back to China. I stopped watching the news. I was introduced to meditation in general. I became a minimalist. Before 1997 I was what you could consider a hoarder. I had tons of clothes! Many of which I never even wore. What changed was that I wanted to slim down my life. I wanted to look at what the vital things are. To look at what matters most.


I bring this up because a lot of investors have subscriptions to “pick-of-the-month” newsletters and get flooded with information about “you must buy this,” “the crash is coming,” or “you gotta invest in this company or your life won’t work out.” But just think about the idea that, what if there was nothing to write about. What if there was nothing to report about today or even this week. I don’t mean ever, of course. But maybe news is just marketing and entertainment. Maybe news is just noise. Maybe it’s noise that creates unnecessary stress and overwhelm in one’s life.

Sometimes There’s Nothing to Say

And guess what? That’s ok. There is beauty in that. We think we need so much, but the reality is that we really don’t. The U.S. Stock Market, the All-World Index, and the International Developed Market have all hit lifetime highs since this blog was posted. They’ve never ever been as high as they at the time of writing. So you might say, “isn’t that news?” Well, it’s news. But it doesn’t have to be sensational news.

Really what’s important here is the simple power of the wisdom of hundreds of millions of people being brought together in a singular way. And the place I find that happening most is in the stock market. That’s why I talk about how when the S&P500 is going higher so is the World Market Index and the International Developed Market Index. That’s what matters most. Not profit margins or valuations – things we are always told matter most.

Price Trumps All 

The point is price trumps all. Check out this price chart below. It is intraday stock price movement following the Space Shuttle Challenger Disaster – when it exploded in 1986. There were four main companies hired to build the shuttle. The space shuttle exploded at around 11:40am – where the red arrow is pointing in the image. Less than 59 minutes later, the world figured out which company manufactured the part that failed. But first look at what happened to the market for all the companies within the hour. It’s incredible. They all start to fall. But when the world figured out which company made the error – the other three companies began to move back to where they were and that one company continued to fall.

One company ended down 12% for the day while the other three only lost 3% for the day. This is what matters. This is how the market is efficient in terms of what’s working and what’s not working.

The Wisdom of the Crowds

The thing I want you to understand is that understanding price charts and understanding how 100’s of millions of people work collectively to bring the market to a singular piece of information like a price chart – you get perspective. It’s super powerful. You eliminate an incredible amount of noise, stress, and overwhelm if you simply know how to look at that information and interpret such a perspective. There’s no need to predict. Go with what’s actually happening. If you go with what’s happening and align yourself with the market you will make your life much easier.

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RC Peck, CFP

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