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Judging from other comments, many investors seem to see the latest all-time high as a reminder of the risk inherent in equities, of the high volatility and perhaps high pricing in today's market. Each new high inevitably inspires some acrophobia, it seems (a fear of heights, that is). Having climbed this high, the market must surely ...

If you do take frequent all-time highs as a sign of risk, let me point out that, well, you're wrong. It is the other way around: The market will reach new highs more often if volatility is low.

On average, we’ve seen new all-time highs some 18 to 20 times a year.

Consider an ordinary savings account. If you're lucky enough to get some interest, your bank account will reach a new high every single day. (It's just too bad the increments are so minuscule.)

On average, we've seen new all-time highs some 18 to 20 times a year. After the dot-com bubble burst, however, the S&P 500 took more than seven years to surpass its previous high. In Norway, more than six years passed before the Norwegian benchmark index climbed above its pre-crisis peak.

In a sense, then, the real danger is having to wait excessively long for the next all-time high.

 

Screenshot from twitter.com/realDonaldTrump

 

Rest assured, however, that there is an infinite supply of new all-time highs. After all, stocks don't generate returns because of business cycles, interest rates or the absence of silly politics. You make money on stocks because the companies you own make money on the products and services they sell. If they keep making money – the S&P 500 has an unbroken record of almost 150 years of positive earnings – the market will keep rising, albeit in leaps and bounds.

This much is certain: You'll never see the market hitting a new all-time low.

Fund updates for October 2019

Pareto Investment Fund
The Norwegian stock market had a good month. Some quarterly reports were weaker than expected, but the market took it with caution or had discounted it in advance.

 

Pareto Aksje Norge
The portfolio showed an increase of almost one per cent. The return so far this year indicates a run rate on a par with the long-run annual average portfolio return.

 

Pareto Nordic Equity
This month, the Nordic index reached a new all-time high despite Trump, Brexit and persistent trade wars. The fund did not keep pace, but nevertheless rose significantly.

 

Pareto Global 
October was a very pleasant month for Pareto Global, with a sharp rise in value. We are now being rewarded for having been true to our value-oriented philosophy.

 

Pareto Nordic Return 
This month, the Nordic index reached a new all-time high despite Trump, Brexit and persistent trade wars. The fund did not keep pace, but nevertheless rose significantly.

 

Pareto Nordic Alpha
The fund continued its good performance in October. The Nordic stock markets also rose, mainly driven by cyclical sectors such as manufacturing and commodities.

 

Pareto Nordic Omega
The fund continued its good performance in October. The Nordic stock markets also rose, mainly driven by cyclical sectors such as manufacturing and commodities.

 

Pareto Nordic Corporate Bond
October was yet another good month for the fund, with stable, positive returns. The Nordic credit market developed well, driven by good capital flows. Internationally, the markets were somewhat more volatile.

 

Pareto Global Corporate Bond
There was a lot of activity with new issues both globally and in the Nordic countries.

 

Pareto Høyrente
October was a good month for Pareto Høyrente. And we are very pleased that none of the fund's around 60 investments have been adversely affected by credit events during the first ten months of the year.

 

 

Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager's skill, the fund's risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments.

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