3 things to know now that the stock market has tripled

By John Spence

The S&P 500 Index, which most financial professionals use to track the performance of the overall U.S. stock market, has now officially tripled in value — along with breaking through the 2,000 level for the first time, ever.

In a recent post, we looked at how often investors should expect 5% corrections, based on market history. This time, however, we'll examine previous bull markets in which U.S. stocks have tripled, and see what lessons there are to be learned.



After all, when it comes to investing, you want to be looking ahead, not in the rear-view mirror. And remember, history never repeats exactly — it rhymes.


Here are 3 things investors should know now that the market has tripled from the 2009 financial-crisis low:


1. This has only happened four other times in recent history

The Armo Trader blog notes that that since 1962, the S&P 500 has tripled from a major low on four occasions.

S&P 500 since 1963 (Click to enlarge)


So the S&P 500 is up 200%, but the interesting thing about the current bull market is that so many individual investors don't trust it.

Who can blame them? Investors burned by the dot-com implosion and the financial crisis within a decade are afraid of another nasty drop, and many have missed the rally.

Now, it's even harder for them to get off the sidelines because the market has already enjoyed a great five-year run. And some investors think stocks are too pricey.

"The United States stock market looks very expensive right now," Yale economics professor and Nobel Prize winner Robert Shiller wrote in a recent New York Times column.

Finally, some investors find it psychologically difficult to buy stocks when they're at all time highs, which takes us to our second point…