businessinsider ). Since May 2015 the stock market had been caught in a consolidation trap, held back by doubts about the US economy, speculation on a China hard landing, unease about cheaper oil and more. But all the fears were overblown.
All-time highs are normal and part of the nature of stock
markets. In the long run stock prices HAVE to go up because the global economy is growing - there is no limit. According to a study of the University of New York the US stock market
(S&P 500) created an average return of about 10% p.a since 1928!
(dividends reinvested nyu.edu/ investopedia). History also shows that in the long run the stock market, represented by the S&P 500, is
gaining around 7% annually on average - without counting dividends (ritholtz ritholtz).
On the average every day is in the green, though just marginally. Dips,
corrections & crashes are anomalies and just aberrations from the
long term upwardly trend.
I believe that the bull market for stocks will
continue for years. Inflation & interest rates are still very low (even that
the Fed will continue hiking her interest rates this year). Companies are
reducing costs & debts, getting more efficient & productive. Last Friday we learned that the US job market is still expanding with a moderate pace and wages continue to grow. The growth of personal incomes in the US will continue to fuel a rising consumer demand which will also generate rising company profits.
The global economy is still getting a lot of tailwinds from cheap
commodities. Last year`s price collapse for oil, industrial metals and
works like a gigantic tax cut. Companies have lower costs, meaning more
money to invest (including into a rising labor force), and consumers
have more money in their wallets. More jobs, faster rising wages and
cheap gasoline should speed up consumer spending in the US which will
foster the global economy (US imports = rising
European & Asian exports).
Companies also are benefitting from the technological
progress - evolution of Internet and other software (including AIs),
robotics, 3D-printing and more - and are getting more efficient which
will translate into rising earnings. The technological progress is
fostering globalization as well. Emerging
countries like China and India have easier access to new technologies
which is promoting their transformation into modern economies. These
processes are working together, creating global economic growth in
the decades to come.