Whitney Tilson

The S&P 500 just hit an all-time high; Long-term investors should expect to see plenty of new highs over the years; The U.S. economy pushes through the trade war, inflation, and more; A reader's experience with Charles Schwab; Spending the weekend with Guy Spier in Zurich

1) The S&P 500 Index finally recovered its April losses and hit another all-time high on Friday. This chart posted on social platform X, courtesy of Charlie Bilello, shows the sharp 21% decline and rapid 28% rally since:

I'm glad that I told my readers during the decline, again and again, to not panic and "sit tight." The economy is healthy overall, so it was only a matter of time before the market recovered from "Liberation Day."

President Donald Trump is a dealmaker and the tariffs are self-inflicted damage, which could be (and have been) altered or reversed. And it's clear he would want to avoid triggering a recession or market crash in the early days of his second term.

2) So, is it time to trim your portfolio and book some profits? Not so fast... As this article by Ben Carlson of Ritholtz Wealth Management shows, long-term investors should expect to see plenty of new highs over the years: All-Time Highs in the Stock Market are Usually Followed by More All-Time Highs. Excerpt:

New highs are nothing to be afraid of. In fact, new highs are a bullish signal most of the time.

Check out this chart from JP Morgan:

They found that if you had invested in the S&P 500 on any given day since 1988, your average total return a year later would have been just shy of 12%.

However, if you only invested on days where the S&P 500 closed at an all-time high your average total return would have been nearly 15%.

The average returns were better from all-time highs!

3) This story in Friday's Wall Street Journal explains why the market hit an all-time high on Friday, despite concerns about tariffs, a trade war, inflation, and geopolitical turmoil: The U.S. Economy Pushes Through the Trade War. Excerpt:

Trump has significantly dialed back the tariffs from what he first proposed. Although tariffs did come into effect starting in February on China, Canada and Mexico, as well as on autos, steel and aluminum, the effect on inflation to date has been milder than feared. Oil prices leapt when Israel attacked Iran and the U.S. joined in, but have since fallen back.

In recent months, business confidence fell amid tariff threats. Yet that sentiment never fully translated into behavior: Businesses kept investing in equipment, factories and technology. They kept adding jobs, albeit at a slower pace than last year.

"The macro economy is doing decently," said Jason Furman, a Harvard economics professor who was an adviser to President Barack Obama. Especially when it comes to tariffs, the market is now more confident "that Trump will back off if necessary," he added. "In April I think the fear was he would just plow ahead no matter what. Now there is a sense that there are realities he won't try to blow past."

Consumer confidence has also recovered a bit. The University of Michigan's consumer sentiment index rose 16% in June from May, though it remains 18% lower than in December.

We've had five years' worth of market returns in two and a half months. So my view is that investors should have very modest expectations for the next five years.

But if you have a long-term investing horizon and own quality stocks and/or funds (ideally index funds, not actively managed ones), then my advice remains the same: Sit tight.

And remember, there's nothing wrong with holding cash or cash equivalents like Treasurys. Just make sure you're getting a market interest rate – three-month to 10-year Treasurys are currently yielding between 3.7% and 4.3%.

4) Speaking of which, I've warned my readers repeatedly about getting fleeced by brokers who only pay a pittance on their cash. Exhibit A is Charles Schwab (SCHW), which I wrote about last year on April 18, April 19, April 22, and November 19.

Reader Kevin P. recently wrote to me about his experience with Schwab:

I have had at least one Schwab account for 30 years, since I was 17 and opened an IRA account. I knew what they were doing with the interest on their sweep accounts and read many of your warnings about it. But I figured I don't trade much, so I can put it into a money market fund and trade in and out when I want to buy a stock.

That worked for quite a while but then I made a mistake. My wife and I bought a new car and I wanted to transfer some cash to my bank. I sold some money market fund shares and transferred cash to my bank account. Only I didn't wait long enough to transfer and got charged margin interest. The transaction took place the very same day. A little over $5 interest on $5,000 for just mere hours of margin loan. $5 isn't a lot, but it did [anger me].

I called to ask if they would reverse the charge, but they refused. So, I told them if you can't reverse it, I am going to move my [money] out and put it somewhere where they will pay me interest on my sweep account and never have to worry about it again. They refused so I moved my accounts to Fidelity.

As he continues (and I agree with his sentiment):

It amazes me that Schwab is still doing this. I guess they have enough loyal customers like me that have been there a long time and don't want to move if they don't have to but I can't see this being good for their long-term business.

Anyway, maybe you could remind your readers one more time that anyone who is still at Schwab should keep this in mind.

Feel free to share my story and thanks for all you do.

Thank you for sharing, Kevin! (I'll note for the sake of disclosure that here at Stansberry Research, we do not recommend or endorse any brokers, dealers, or investment advisers. We aren't affiliated with any brokerage and don't receive any compensation for mentioning a particular broker.)

5) Longtime readers know how much I love to travel... During the average year, I make roughly two dozen trips to places as close as Baltimore, Maryland (where Stansberry Research is headquartered) to Nairobi, Kenya (where my parents have retired).

So you can imagine how much I missed traveling during the seven months of my mayoral campaign, when I spent only one night out of New York City (attending my youngest daughter's college graduation two weeks ago, which I shared in my June 16 e-mail).

Well, I'm starting to make up for it by spending a few weeks in Europe with my lovely wife. Our first stop is Zurich, Switzerland, where we're visiting our longtime friend, Guy Spier of Aquamarine Capital, and his family.

Every year, Guy hosts two VALUEx conferences that I always try to attend – one in Klosters in early February and the other the day before Berkshire Hathaway's (BRK-B) annual meeting in Omaha, Nebraska.

I highly recommend his wonderful book (in which I make a brief appearance), The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment. He also did an excellent interview on William Green's Richer, Wiser, Happier podcast (part 1 here and part 2 here).

Over the weekend, temperatures exceeded 90 degrees, so we went for a swim in nearby Lake Zurich:

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.

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