Should You Invest At All Time Market Highs? And the Dreaded Selfie

July 27, 2025

HEAVY WEEK OF CELEBRITY DEATHS: Over the past week, the world lost of lot of talent in the entertainment world: Malcolm-Jamal Warner, Ozzy Osborne, Hulk Hogan, and Chuck Mangione. I've got Spotify open listening to Chuck Mangione performances right now as I write. It is great background music for this kind of work. I don't think I could put together many intelligent thoughts with Ozzy Osbourne's music playing.

WHAT WILL THE FED AND OTHER CENTRAL BANKS DO?: This coming Wednesday, the Fed will announce their decision on interest rates. It is expected that they will do nothing once again, which will create a lot of speculation centered on the September meeting. The Federal Funds rate is currently set at 4.25-4.5%. Canada's central bank will be announcing their rate decision on Wednesday as well, and it is generally expected that it will keep its rate steady at 2.75%. Brazil's current rate is 15.0%, and its central bank is expected to leave it there for a while. Meanwhile, Japan is likely to keep its rate at 0.5%, announcing its decision on Thursday.

ANOTHER WEEK, ANOTHER RECORD HIGH: The week closed at new record highs for the S&P 500 and the NASDAQ Composite. All eleven sectors of the S&P 500 experienced gains. Trade agreements between the U.S. and Japan and The Philippines helped boost market sentiment. Japan agreed to invest $550 billion in the U.S., and a 15% tariff on Japanese goods into the U.S. will remain. Google released its second quarter earnings, beating expectations and forecasting more spending which boosted its stock and created more bullish trading generally.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

SO WHAT HAPPENS IF YOU INVEST AT AN ALL TIME HIGH?: Intuitively, many investors get uncomfortable when markets reach new highs. After all, what goes up must come down, right? The chart below uses data from 1925 to 2024, and it shows the historic results of investing at all time highs. As you can see, historically, the next twelve months are more than a full percentage point better than all other times. The 24 and 36 month outcomes are pretty much the same.

NO CLEAR SENTIMENT: Sentiment is almost evenly divided among investors. According to the American Association of Individual Investors, 37% of investors are currently bullish. 34% are bearish. The remaining 29% are neutral.

NEW ORDERS FOR DURABLE GOODS PLUMMET: In June, new orders for durable goods decreased by 9.3%, the steepest month-over-month decline since the government-shutdowns of 2020. The drop was almost entirely due to a drop in commercial aircraft orders. During President Trump's tour through Saudi Arabia the month before, Qatar Airways made a massive order of new aircraft from Boeing. Of course, that pace of aircraft orders is not sustainable. If you take aircraft out of the data, orders rose across all major categories. Broad-based gains are good. But if you take aircraft out of the data, durable goods orders ae up only 2.2% over the course of the past year, hovering around the same rate as inflation.

HOTEL OCCUPANCY STRUGGLING: The graph below shows hotel occupancy using a four-week moving average. The red line is this year. As you can see, it is tracking behind last year and the median for 2000-2024 and way behind the banner year of 2018. The current average daily revenue per available room for hotels in the U.S. is $118.54.

SALES OF NEW HOMES STRUGGLING: 627,000 new homes sold in June, which was better than May, but represents the sixth month in a row where the year-over-year sales have shown a decrease.

GROWTH OF STABLECOIN: We all hear news about cryptocurrency and Bitcoin and the like. But another type of currency, Stablecoin, is making steady progress to becoming a commonplace currency for transactions, especially international ones. Stablecoins have gone from zero to about $250 billion in market cap in six years. Most comes from Tether (USDT) and USD Coin (USDC). These are both backed 1-1 by U.S. dollars held in reserve. Most stablecoins are backed by the dollar, with about 10% crypto-backed. In 2025, stablecoins have been used in 1.1 billion transactions after a total of 1.25 for all of last year. Tether accounts for 78%. Stablecoins are growing and becoming more important in the financial system. They could replace international bank wires and similar type transactions because they are faster, cheaper, and more transparent. They can work around the clock and on weekends and holidays with lower fees. Transactions happen on the blockchain and are easier to track. Be prepared to see and hear more about stablecoins in the near future.

SELFIES: I hate, really hate, taking selfies. But I give in and take them sometimes. These two recent ones show you how cool my life is right now with six grandkids. Here is the youngest sleeping on my shoulder, and the third oldest perched on my shoulders.

Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

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"True maturity is learning that your opinion doesn't always need to be spoken." Malcolm-Jamal Warner (1970-2025)

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SOURCES:

NEW ORDERS FOR DURABLE GOODS PLUMMET: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/7/25/new-orders-for-durable-goods-declined-9.3percent-in-june

GROWTH OF STABLECOIN: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/7/24/stablecoins-101

HOTEL OCCUPANCY STRUGGLING: https://str.com/press-release/us-hotel-results-week-ending-19-july

SALES OF NEW HOMES STRUGGLING: https://www.calculatedriskblog.com/2025/07/newsletter-new-home-sales-increase-to.html

WHAT WILL THE FED AND OTHER CENTRAL BANKS DO?: https://www.wsj.com/economy/week-ahead-for-fx-bonds-fed-decision-u-s-jobs-data-tariff-deadline-in-focus-dbcda08d?mod=economy_lead_pos2

NO CLEAR SENTIMENT: https://myweeklystock.substack.com/p/weekly-market-recap-jul-21-25-the?utm_source=post-email-title&publication_id=697043&post_id=169169275&utm_campaign=email-post-title&isFreemail=false&r=s86er&triedRedirect=true&utm_medium=email

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SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.