Bears have been warning for some time that what goes up must come down, and claim that the market is overvalued by continuing to rise so high. The problem with this view is that we can't know until later how long the upside of any current move was going to last. In a sense, the market has been making new highs for as long as it's existed. Its whole timeline is a chart moving steadily from the lower left corner to the upper right, and anybody fearing all-time highs along the way missed out on the whole thing. Remember, stocks rise two-thirds of the time and fall only one-third, hence the net rise higher.

The current earnings season shows why. Companies are locked in a permanent quest for higher earnings, and the good ones keep achieving them. This pushes their stock prices higher. Eventually, when the businesses mature, dividends appear and possibly share buybacks. If earnings and revenue are rising, we should expect share prices to rise, too. If the two factors rise together, all-time highs do not necessarily spell overvaluation. The ratios, such as P/E and P/S, can stay reasonable even on an upward price path.

Given this, it makes sense that all-time highs are usually followed by more all-time highs. LPL Financial put out a good report on this topic in their July Wealth Insights letter. If you bought at an all-time high on the S&P 500 from 1928-2016, the following were the percentage chances of hitting another high within the given time frame:

• 91% within 1 month
• 97% within 3 months
• 98% within 6 months
• 99% within 1 year

This is another way of looking at what it means to participate in owning a line that steadily rises. Higher highs are most often followed by even higher highs, with some breaks in between. Too many investors fret over the breaks instead of benefiting from the preponderance of appreciation.

It should also be obvious that on a generally rising line, most highs will be all-time ones, right? This is how the phrase "all-time" can be used so extensively by media, implying a cause for concern or something historic when all it's really doing is describing the obvious. Release a helium balloon and it will achieve as many all-time highs as you can blurt out before it disappears from sight.