Anyone remember April?
Stocks plummeted after the rollout of President Trump’s tariffs.
By now, it nearly feels forgotten because stocks have been on a historic run.
In fact, it is one of the best six-month rallies in history.
Not only that, stocks have been hovering at record highs for quite a while.
Will it continue? No one knows, but, as the below chart shows, there have been several periods where they have continued to hover near record highs much longer.
In April, it would have been hard to imagine that stocks could come back so strong. The feeling was that they were going to go down for a while. In the middle of a decline, investors are prone to think that their values are going to continue to evaporate.
This is psychologically normal. It feels insane to keep stocks when they are falling so fast, yet oftentimes the ones who sell in the midst of the decline are the ones that look insane.
It sure looks that way this year.
Blake Millard writes:
You don’t get 8-10% annual returns without signing up for the 30-40% drawdowns. You don’t get the magic of compounding without enduring periods that test your sanity.1
Can the market keep going higher? Surprisingly, during past rallies of this magnitude, stocks are up 12 months out. Ryan Detrick has the research:2
The last five times this has happened, the average and median investment returns over the next year have been above 10%.
Aren’t stocks expensive? By many metrics, yes. But that doesn’t always indicate where stocks are headed in the near term.
Isn't the spending of AI companies, which are driving much of the stock market gains, getting a bit too enthusiastic? Sure—Bloomberg recently highlighted concerns over the interconnected circularity of money movement between these companies.3
Are there other warnings out there about a coming dip in equities? Yes, Jamie Dimon of JPMorgan just offered one.
But these kinds of questions often plague the stock market.
Investors are always testing their own sanity because stocks don’t often feel sane.
They often feel too high or not low enough.
The sanest investors have been those that stick with a financial plan tied to things like risk tolerance and time horizon to meet life goals, so they can survive the highs and lows of the market without making insane investment decisions along the way.
As one person put it, “The market may be crazy, but that doesn’t make you a psychiatrist.”
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Sources:
- “The Sandbox Daily”, Tuesday, October 7, 2025.
- Posted on X on October 8, 2025. Accessed online: https://x.com/RyanDetrick/status/1976110901678985429/photo/1
- “OpenAI, Nvidia Fuel $1 Trillion AI Market With Web of Circular Deals”, October 7, 2025. Accessed online: https://www.bloomberg.com/news/features/2025-10-07/openai-s-nvidia-amd-deals-boost-1-trillion-ai-boom-with-circular-deals