Three months ago, the financial headlines were dominated by fear. Bearish sentiment ruled the airwaves, short sellers were confident, and pessimism was widespread.

But the market—as it often does—had other plans. In an astonishing move, the S&P 500 has rallied from a sharp 18% drawdown to a fresh 1-year high in just 3 months, a rare and powerful signal that has only happened a handful of times in nearly a century.

And if history is any guide, this might not be the time to sell.

What the Data Tells Us: History Favors Patience, Not Panic

The chart above highlights the eight historical instances (since 1927) when the S&P 500 rallied this sharply and this quickly. What follows is a consistent trend: strong gains and limited downside after the rally.

Let’s break it down:

100% of the time, the market was higher 3 and 12 months later.
Average 1-year return after the signal? A strong +21.71%.
Average 6-month return? +10.33%.
Even 1 month after the new high, the average gain was still +1.94%, with downside risk well contained.

The Worst Case Was... Not That Bad

What stands out most in this data is how shallow the drawdowns were after these rallies. The worst post-signal drop occurred in 1988, when the market declined by only 5.57% a month later. That's it—not a crash, not a crisis—just short-term volatility.

And in the vast majority of cases, those minor pullbacks gave way to double-digit gains in the months that followed.

Trust the Process: Rebalance, Read Research, Tune Out the Noise

At Wealth|KC, we stuck to our long-term process. We rebalanced when things looked bleak. We read research instead of headlines. We didn’t chase hype or succumb to fear. Instead, we leaned into our long-term philosophy and strategy, just as we advise our clients to do. We’ve bought low and participated in the rebound because we stayed committed to the fundamentals: diversification, discipline, and data-driven decision making.

Now that we’re back to all-time highs, it doesn’t mean the market is “due” to fall. History shows that momentum like this is more often a launchpad than a ceiling. As tempting as it is to “take profits” when things feel good, the evidence suggests that this rally could just be getting started.

Process > Predictions

Shean

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