Our strong start to 2012 has continued so far in March, with the S&P 500 up nearly 10% so far this year. The rally has continued this week, with markets on pace to reach some milestones if the strong performance continues today.
The NASDAQ is currently on pace to close above 3,000- a level it has not been at since late 2000. The S&P 500 could reach its highest close in nearly three years, and the DOW could again surpass the 13,000 milestone.
What do these levels mean for us as investors? It certainly demonstrates the resilience of the markets. We have made it through unprecedented volatility in the last ten to twelve years, with the bursting of the tech bubble, market declines after 9/11, the “great recession’s” steep and sudden swings, and extreme volatility in the second half of 2011, only to see the markets now nearing significant milestones yet again.
It also reinforces the importance of making investment decisions based on a long-term outlook rather than responding to shorter-term market events and situations. Investors who sold out of their investments during any of these aforementioned times of market turmoil very likely missed out on at least part of the markets’ gains when things turned positive. It can be tough to stay the course in times of volatility, but the investors that do are often rewarded.