Don't Fear the All-Time High!

Today’s Market Update

We saw volatile markets today, giving up some of the gains achieved over the last few sessions. The day's trading started with significant news from Japan, where the Japanese market was seeing a sharp decline.

The rise in Japanese yields is a key concern because it impacts the carry trade, which typically provides cheap stimulus liquidity to the rest of the world.

The expiry day didn't offer any significant upward push.

• Looking at the charts, the Nifty gave up the entire gain of the previous day, ending down 0.4%.

• However, the Nifty Junior saw a much steeper cut at 0.73%, losing what it had gained over the last five sessions.

• Midcaps were also down 0.62%, losing yesterday's gains and the gap-up opening.

• Small caps experienced a bigger fall of minus 1.02%, giving up about four or five days of gain.

• Banks, however, were very flat at minus 0.11%. It is clear across these indices that the banking sector remains the strongest part of the market.

• Precious metals had a very quiet day, with Gold absolutely flat at minus 0.07%, still hugging its average.

• Silver was slightly up at 0.62%.

Other Market Triggers

• Almost nothing was spared today, including IT stocks, FMCG stocks, steel and cement, infrastructure stocks, and banking and finance.

• The only exceptions that gained were Axis Bank and Bharti Airtel, with Bharti Airtel making new highs even in this tough market environment.

• Reliance was flat. In the Nifty Next 50 space, there was a lot of red, with Adani stocks, DLF, Lodha, Hindustan Zinc, Jindal Steel, and LTIM all down.

• However, there were some greens in Enrin, ABB, and Pidilite, along with HAL and Hyundai.

• The Mover of the Day was Bombay Burma Trading Company (BBTC), which surged 10% following the company's announcement that it had terminated an agreement with MSTC for the e-auction of immovable properties. Whether this was the primary reason or not, the news was followed by a huge run-up.

U.S. Market Update

• In the previous session, US markets were weak. The S&P 500 was 1% down, the Dow Jones 1.2% down, and the Nasdaq nearly 0.9% down.

• The Russell 2000 was hit very hard, down 2%, which is not a common occurrence.

• Some of the stocks leading the down moves were Booking Holdings Inc. (4.8%), American Express (4.4%), Capital One, Qualcomm, and MetLife (all down between 3% and 4%). The disclaimer here is that some of these stocks may be part of the Weekend Investing U.S. stock strategy and are certainly not recommendations.

What to watch next ?

• If the Japanese carry trade becomes expensive and unwinds, all asset classes feel the pressure. This unwinding pressure is also visible in US tech stocks and the crypto world.

• Compared to other global markets, Nifty’s fall is not a remarkably big fall, which shows our continued resilience.

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Don't Fear the All-Time High!

We're diving into a fascinating piece of market research today, originally shared by Mike Zaccardi on X (formerly Twitter), focusing on a phenomenon that often causes investors to hesitate: The All-Time High (ATH).

The core of this discussion is an infographic that charts the S&P 500 (blue line) from 1970 up to 2025 (a 55-year study).

The moments an All-Time High was created are highlighted by orange lines and orange dots.

Key Observation:

• ATHs are rarely solitary events. When the market starts hitting new highs, it typically triggers a series of multiple, consecutive ATHs.

• The chart shows long, continuous streaks of new highs, indicating that the market often "runs" after crossing a previous peak. While there are exceptions (where a single ATH is followed by a downturn), the continuity is a dominant pattern.

• The lesson: When an ATH is formed, it tends to pull the market further up, showing momentum and strength, rather than exhaustion.

📈 The Data-Driven Case for Investing at the Peak

The most compelling part of this study is the performance data comparing two investment strategies over this 55-year period:

The data clearly illustrates that investing specifically at an All-Time High yielded better average returns over a two-year rolling period than simply investing at any random point in time.

💡 The Core Takeaway: Conquer Your Fear of Highs

A common psychological hurdle for investors is the fear of buying at the top. When a stock, sector, or the broader market reaches an ATH, many people choose to "wait for a correction," believing the market is due for a fall.

The analysis strongly suggests that this fear is often unfounded and detrimental to potential returns.

• The Probability Play: An All-Time High signals strong demand and momentum. The probability that an ATH will be followed by several more ATHs is very high.

• Exit Strategy: While we should never be complacent—there will be times where an ATH is followed by a drop, requiring an exit—the historical norm is for the market to continue its ascent.

Do not let the All-Time High deter you. Investing during periods of market strength (new ATHs) is statistically more likely to be profitable over a medium-term horizon.

Meme Of The Day