There Is No Bell

Being an investor in the stock market is a bit like being an extreme sport athlete.

You know there are natural boundaries and limits to what can be achieved, but where those boundaries lie is not easy to discern.

Let’s say you are a skateboarder. In fact, let’s say you are Tony Hawk, who is probably one of the most widely known and respected skateboarders in history. At age 15, he was the first to land a 720, which is two full rotations in the air. It was something no one else had ever done.

But he wasn’t finished. Hawk wanted to land a 900, which is two-and-a-half full rotations. It took him 14 years – and several cracked ribs, multiple concussions, and several lost teeth – but he eventually became the first to land a 900, as well.

It was a monumental task – something no one thought possible.

And yet today, a 900 seems ordinary. Skateboarders are now landing 1260s – three-and-a-half full rotations.

What does this have to do with investing?

We never know how far the stock market can go before it reaches its limit.

Tony Hawk probably had plenty of people telling him a 900 was impossible. Every time he busted a rib or broke a tooth, his detractors were probably saying, “See. I told you so.” But those were merely setbacks on a journey to greater heights – and spins, in Hawk’s case.

No matter how much Hawk tried, however, he was never able to muster a trick bigger than a 900. He found his limit, but, notably, it was only known with the benefit of hindsight where that limit was set for him.

We have solid data for the stock market going back to 1928. Since that time, the stock market has returned around 10%. However, over shorter periods of time – five, 10, and even 15 years – the results have been wide-ranging.

Some investors today are on record saying the stock market is overvalued. Frankly, I sympathize with their argument and think a bit more caution than usual is warranted, especially for investors who depend on their portfolio for living expenses.

But that doesn’t mean the market is destined for a fall anytime soon. Again, the long-term average for the stock market is 10% annually. As of the end of 2025, the stock market has racked up the following records:

Prior five years: 14.3%

Prior 10 Years: 14.7%

Prior 15 Years: 13.9%

That data alone seems to align with investors who are expressing concerns about the market going forward. Before jumping on the bandwagon, though, consider this: In 1995, investors experienced similar historical returns. The stock market continued bolting higher for four more years. If you jumped ship in 1995, you would have missed out on returns of 23% in 1996, 33% in 1997, 28% in 1998, and 21% in 1999.

I’m not arguing whether the table is set up for anything close to the late 1990s run-up in the stock market. I’m just saying it’s happened before.

So anytime you hear a market commentator – or YouTube personality – spouting gloom and doom or unrestrained optimism, just know they are guessing. They don’t have a crystal ball or any secret data that is guiding their overly confident market viewpoint.

There is no bell that rings at market tops.

The best we can do as investors is to be prepared for any outcome – and to avoid risking money you can’t afford to lose.