Stocks closed higher Friday following a strong monthly jobs report to clinch a sixth straight week of gains, with the S&P 500 and Nasdaq Composite hitting their highest closing levels since early 2022. More broadly, the drop in the unemployment rate to 3.7% combined with rising payrolls and earnings portrays an economy that is easing toward a soft landing and is not on the brink of a recession. For the week, the Nasdaq climbed 0.7%, the S&P added 0.2% and the Dow Jones average finished flat. 

The focus now turns to the Federal Reserve’s last monetary policy committee meeting of the year next week. Markets are widely anticipating the central bank to hold steady on rates. This has the bond market in a world of worry. After the beating they’ve taken in bonds over the last two years, investors could be forgiven for wondering if it was ever a good idea to rely on fixed income in the first place.

Investors have finally figured out that bonds are no more insulated from downturns than stocks. With the bull market at the early stages of a long rally, investors are pulling money out of conservative investments and pilling onto equities.

Future Wealth’s View

We are all human. When our blood pressure goes above a certain threshold range, we quickly go to the doctor when the most obvious fix to lose weight and exercise more is staring us in the face. Of course, once the doctor says the same thing, we take measures to build an exercise routine into our daily lives.

Investing is no different. We all know that randomly investing in companies is not going to work every time. But, in a strange twist of emotional delusion, when we get it wrong, we simply are in denial and expect that somehow, by magic, that stocks we picked will appreciate again to the level we bought them at, if not, exceed to provide some gains.

In many ways, the stock market is to blame. When the entire stock market is doing well, every investor pats himself on the back for being a great stock picker. Of course, that is not anymore true than those who institutionalized the bond market as a safe haven.

If investing was easy, everyone would be a billionaire. But very few became billionaires by investing randomly. Most, if not all, earned their money the hard way – through education, experience, long hours of diligent research and patience.

Even as the bull market makes all of us wealthier, let us remember that “Nothing comes easily”.