Checking in on the unluckiest market timer I know 🍀
Plus a charted review of the macro crosscurrents 🔀
📈The stock market rallied to all-time highs last week, with the S&P 500 setting an intraday high of 6,290.22 and a closing high of 6,280.46 on Thursday. The index is now up 6.4% year-to-date. For more on how the market moves, read: Stocks usually look past geopolitical events 🫣
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I recently wrote about the unluckiest market timer I know. This unfortunate fellow has a history of making big, lump-sum purchases near market tops.
Unfortunately, that unlucky market timer is me.
After doing my 2024 tax returns in February, I learned I had some extra cash to put to work. So, I tossed it into my self-employed 401(k) plan and made a lump sum purchase of an S&P 500 index fund on Feb. 18.
The market climbed to a new record high the very next day. That ended up being a top, and from there the S&P 500 proceeded to fall by around 20% before bottoming on April 7.
But was I as unlucky as I felt in the moment? As unpleasant as that experience was, I knew I had the luxury of time and that I shouldn’t let my emotions get near my portfolio. Because as TKer Stock Market Truth No. 2 reminds us, double-digit, intra-year drawdowns are typical even in upward-trending markets.
That self-counsel proved wise. The stock market surged from its April lows and set a new record high on June 27. It was a quicker recovery than usual and what I would’ve expected. But that’s the stock market for you.
As I wrote back in March, “Time is the unlucky market timer’s best friend.”
All-time highs have been a great time to buy 👍
The stock market usually goes up. Over 6-month, 1-year, 2-year, 3-year, and 5-year periods, the S&P 500 on average has generated positive returns.
That trend even applies to record market highs. As data from JP Morgan Asset Management shows, investing specifically at all-time highs generated even higher average returns over these time horizons.
“Investors usually use all-time highs as a reason to stay in cash or on the sidelines,” JP Morgan analysts wrote. “However, history suggests that investing at all-time highs is not a bad strategy because new highs are typically clustered together. In other words, market strength begets more market strength.”
If you have money to put to work in the stock market, it’s reasonable first to ask if market conditions are attractive.
Unfortunately, it’s impossible to know if or when prices will fall before climbing again. And waiting for lower prices risks missing out on important gains.
The key question is whether you are willing and able to put in the time. The longer your investment timeframe, the better your odds of generating a positive return.
The best thing about all this is knowing that you don’t have to be a good market timer to be a successful investor.
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Related from TKer:
The unluckiest market timer I know made another poorly timed trade 🤦🏻♂️
It's OK to have emotions — just don't let them near your stock portfolio 📉
12 charts to consider with the stock market near record highs 📈
Listen up! 🎧
Whether it’s the stock market or life, nothing unfolds as you would’ve hoped or expected. People like me who’ve spent their adult lives working in the rapidly evolving media industry definitely understand this.
I discussed my experience in media with Barry Ritholtz in a new episode of Bloomberg’s At The Money podcast. Catch it on Bloomberg, Spotify, Apple Podcasts, or YouTube!
Review of the macro crosscurrents 🔀
There were several notable data points and macroeconomic developments since our last review:
💼 New unemployment claims tick lower. Initial claims for unemployment benefits declined to 227,000 during the week ending July 5, down from 232,000 the week prior. This metric remains at levels historically associated with economic growth.
Insured unemployment, which captures those who continue to claim unemployment benefits, rose to 1.956 million during the week ending June 28. This is the print since November 2021.
Steady initial claims confirm that layoff activity remains low. Rising continued claims confirm hiring activity is weakening. This dynamic bears watching as it reflects a deteriorating labor market.
For more context, read: The hiring situation 🧩 and The labor market is cooling 💼
🤑 Wage growth is cool. According to the Atlanta Fed’s wage growth tracker, the median hourly pay in June was up 4.2% from the prior year, down from the 4.3% rate in May.
For more on why policymakers are watching wage growth, read: Revisiting the key chart to watch amid the Fed's war on inflation 📈
👍 Inflation expectations cooled. From the New York Fed’s May Survey of Consumer Expectations: “Median inflation expectations decreased by 0.2 percentage point to 3.0% at the one-year-ahead horizon. They were unchanged at the three-year- (3.0%) and five-year-ahead (2.6%) horizons in June.”
The introduction of new tariffs risks higher inflation. For more, read: 5 outstanding issues as President Trump threatens the world with tariffs 😬
⛽️ Gas prices tick lower. From AAA: “With summer road trips in full swing, drivers are getting a break at the pump, as gas prices match July 2021 numbers. The national average for a gallon of gas dipped as low as $3.14 this past week before going up a few cents to $3.17. It’s been four years since the national average has been this low during the summer. This season’s lower pump prices are due to an abundance of supply in the oil market. Halfway through the year, the national gas price comparison chart shows how steady prices have remained in 2025 compared to recent years.”
For more on energy prices, read: Higher oil prices meant something different in the past 🛢️
💳 Card spending data is mixed. From JPMorgan: “As of 04 Jul 2025, our Chase Consumer Card spending data (unadjusted) was 3.1% above the same day last year. Based on the Chase Consumer Card data through 04 Jul 2025, our estimate of the US Census June control measure of retail sales m/m is 0.41%.”
From BofA: “Credit and debit card spending per household increased 0.2% year-over-year (YoY) in June, compared to 0.8% YoY in May, according to Bank of America aggregated card data. Seasonally adjusted (SA) spending per household rose 0.3% month-over-month (MoM) in June, but that only partially unwound the MoM declines of 0.2% and 0.7% in April and May.”
For more on consumer spending, read: Americans have money, and they're spending it 🛍️
👎 Small business optimism ticks lower. The NFIB’s June Small Business Optimism Index declined to 98.6 in June from 98.8 in May. From the report: “Small business optimism remained steady in June while uncertainty fell. Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs.”
For more on the state of sentiment, read: The confusing state of the economy 📊 and Beware how your politics distort how you perceive economic realities 😵💫
🏠 Mortgage rates tick higher. According to Freddie Mac, the average 30-year fixed-rate mortgage rose to 6.72%, up from 6.67% last week. From Freddie Mac: “After declining for five consecutive weeks, the 30-year fixed-rate mortgage moved slightly higher following a stronger-than-expected jobs report. Despite ongoing affordability challenges in the housing market, home purchase and refinance applications are responding to the downward trajectory in rates, increasing by 25% and 56%, respectively, compared to the same time last year.”
There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to the small weekly movements in home prices or mortgage rates.
For more on mortgages and home prices, read: Why home prices and rents are creating all sorts of confusion about inflation 😖
🏢 Offices remain relatively empty. From Kastle Systems: “Peak day office occupancy was 58.3% on Thursday last week, as workers stayed home or took leave in the days leading up to the July 4th holiday. Every tracked city experienced decreases on Monday, Tuesday, and especially Wednesday – down nine points from the previous week to 52.9%. Chicago, San Jose, and New York City had the largest drops on Wednesday, falling more than 14 points to 58%, 13.5 points to 43.7%, and more than 11 points to 54.6%, respectively. The average low was on Friday at 34.9%, up nearly three points from the previous week.”
For more on office occupancy, read: This stat about offices reminds us things are far from normal 🏢
📈 Near-term GDP growth estimates are tracking positively. The Atlanta Fed’s GDPNow model sees real GDP growth rising at a 2.6% rate in Q2.
For more on GDP and the economy, read: 9 once-hot economic charts that cooled 📉 and You call this a recession? 🤨
Putting it all together 📋
🚨 The Trump administration’s pursuit of tariffs threatens to disrupt global trade, with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get more clarity, here’s where things stand:
Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices.
Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — shifted its focus toward supporting the labor market.
But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less “coiled” these days as major tailwinds like excess job openings and core capex orders have faded. It has become harder to argue that growth is destiny.
Actions speak louder than words: We are in an odd period, given that the hard economic data decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continues to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up.
Stocks are not the economy: There’s a case to be made that the U.S. stock market could outperform the U.S. economy in the near term, thanks largely to positive operating leverage. Since the pandemic, companies have aggressively adjusted their cost structures. This came with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth.
Mind the ever-present risks: Of course, we should not get complacent. There will always be risks to worry about, such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets.
Investing is never a smooth ride: There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect as they build wealth in the markets. Always keep your stock market seat belts fastened.
Think long-term: For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak that long-term investors can expect to continue.
For more on how the macro story is evolving, check out the previous review of the macro crosscurrents. »
Key insights about the stock market 📈
Here’s a roundup of some of TKer’s most talked-about paid and free newsletters about the stock market. All of the headlines are hyperlinked to the archived pieces.
10 truths about the stock market 📈
The stock market can be an intimidating place: It’s real money on the line, there’s an overwhelming amount of information, and people have lost fortunes in it very quickly. But it’s also a place where thoughtful investors have long accumulated a lot of wealth. The primary difference between those two outlooks is related to misconceptions about the stock market that can lead people to make poor investment decisions.
The makeup of the S&P 500 is constantly changing 🔀
Passive investing is a concept usually associated with buying and holding a fund that tracks an index. And no passive investment strategy has attracted as much attention as buying an S&P 500 index fund. However, the S&P 500 — an index of 500 of the largest U.S. companies — is anything but a static set of 500 stocks.
The key driver of stock prices: Earnings💰
For investors, anything you can ever learn about a company matters only if it also tells you something about earnings. That’s because long-term moves in a stock can ultimately be explained by the underlying company’s earnings, expectations for earnings, and uncertainty about those expectations for earnings. Over time, the relationship between stock prices and earnings has a very tight statistical relationship.
Stomach-churning stock market sell-offs are normal🎢
Investors should always be mentally prepared for some big sell-offs in the stock market. It’s part of the deal when you invest in an asset class that is sensitive to the constant flow of good and bad news. Since 1950, the S&P 500 has seen an average annual max drawdown (i.e., the biggest intra-year sell-off) of 14%.
How the stock market performed around recessions 📉📈
Every recession in history was different. And the range of stock performance around them varied greatly. There are two things worth noting. First, recessions have always been accompanied by a significant drawdown in stock prices. Second, the stock market bottomed and inflected upward long before recessions ended.
In the stock market, time pays ⏳
Since 1928, the S&P 500 generated a positive total return more than 89% of the time over all five-year periods. Those are pretty good odds. When you extend the timeframe to 20 years, you’ll see that there’s never been a period where the S&P 500 didn’t generate a positive return.
What a strong dollar means for stocks 👑
While a strong dollar may be great news for Americans vacationing abroad and U.S. businesses importing goods from overseas, it’s a headwind for multinational U.S.-based corporations doing business in non-U.S. markets.
Economy ≠ Stock Market 🤷♂️
The stock market sorta reflects the economy. But also, not really. The S&P 500 is more about the manufacture and sale of goods. U.S. GDP is more about providing services.
Stanley Druckenmiller's No. 1 piece of advice for novice investors 🧐
…you don't want to buy them when earnings are great, because what are they doing when their earnings are great? They go out and expand capacity. Three or four years later, there's overcapacity and they're losing money. What about when they're losing money? Well, then they’ve stopped building capacity. So three or four years later, capacity will have shrunk and their profit margins will be way up. So, you always have to sort of imagine the world the way it's going to be in 18 to 24 months as opposed to now. If you buy it now, you're buying into every single fad every single moment. Whereas if you envision the future, you're trying to imagine how that might be reflected differently in security prices.
Peter Lynch made a remarkably prescient market observation in 1994 🎯
Some event will come out of left field, and the market will go down, or the market will go up. Volatility will occur. Markets will continue to have these ups and downs. … Basic corporate profits have grown about 8% a year historically. So, corporate profits double about every nine years. The stock market ought to double about every nine years… The next 500 points, the next 600 points — I don’t know which way they’ll go… They’ll double again in eight or nine years after that. Because profits go up 8% a year, and stocks will follow. That's all there is to it.
Warren Buffett's 'fourth law of motion' 📉
Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
Most pros can’t beat the market 🥊
According to S&P Dow Jones Indices (SPDJI), 65% of U.S. large-cap equity fund managers underperformed the S&P 500 in 2024. As you stretch the time horizon, the numbers get even more dismal. Over a three-year period, 85% underperformed. Over a 10-year period, 90% underperformed. And over a 20-year period, 92% underperformed. This 2023 performance follows 14 consecutive years in which the majority of fund managers in this category have lagged the index.
Proof that 'past performance is no guarantee of future results' 📊
Even if you are a fund manager who generated industry-leading returns in one year, history says it’s an almost insurmountable task to stay on top consistently in subsequent years. According to S&P Dow Jones Indices, just 4.21% of all U.S. equity funds in the top half of performance during the first year were able to remain in the top during the four subsequent years. Only 2.42% of U.S. large-cap funds remained in the top half
SPDJI’s report also considered fund performance relative to their benchmarks over the past three years. Of 738 U.S. large-cap equity funds tracked by SPDJI, 50.68% beat the S&P 500 in 2022. Just 5.08% beat the S&P in the two years ending 2023. And only 2.14% beat the index in the three years ending in 2024.
The odds are stacked against stock pickers 🎲
Picking stocks in an attempt to beat market averages is an incredibly challenging and sometimes money-losing effort. Most professional stock pickers aren’t able to do this consistently. One of the reasons for this is that most stocks don’t deliver above-average returns. According to S&P Dow Jones Indices, only 24% of the stocks in the S&P 500 outperformed the average stock’s return from 2000 to 2022. Over this period, the average return on an S&P 500 stock was 390%, while the median stock rose by just 93%.
