This Week’s Blog Is Written By Scott D. Heins, CFP®, IAG Chief Investment Officer
November 5, 2025

Congratulations on surviving what is typically the worst six months of the investment year!

The old axiom “Sell in May and go away” has been loosely rooted in historical data for multiple decades. It has just been flat wrong for the last two consecutive years. Perhaps not so coincidentally, the March through April period has been pretty rough for two consecutive years.

As I survey the investment landscape today, I find myself rationally challenged.

Yes, the current earnings season has been strong. Most companies are maintaining or expanding profitability despite all of the headwinds.

Over the last decade, the historical price of $1 of anticipated future earnings for the S&P 500 Index companies is $18.50. To put it another way, on average, if a company is anticipated to earn $10 per share over the next 12 months, then its share price would be around $185 per year ($10 x $18.50). Of course, each company and industry is different, and traders are often paying more or less (sometimes significantly) than this average.

Currently traders are paying $22.91 for every $1 of anticipated future earnings for S&P 500 Index companies. That is 124% of the historical average and the absolute highest price over the last 10 years according to JPMorgan.

The rational side of my brain struggles with this. If your future returns are anchored to the current price, then paying the highest price in the last 10 years is suboptimal. I strongly prefer to buy assets when they do not need to continue to break 10-year records to be profitable.

My rational thoughts are trying to convince me to sell now and buy later.

But the market does not respect my rational thoughts. It completely ignores the most logical path and confounds those who are bold enough to tell it where it should be or where it should go.

While many people believe that the financial markets are eminently logical based on the incredibly deep analysis of very talented individuals, the reality is that numbers can be and definitively are used to justify emotions and irrational thoughts.

And there is no limit on irrational thoughts.

Just because the stock market appears to be expensive today does not mean irrational thought can’t drive it to be more expensiver tomorrow.

The fact is that patient investors with disciplined long-term plans profit from irrational thought. When markets reflect irrationally high prices, they stick to their investment risk budget and trim back at high(er) prices. When markets reflect irrationally low prices, they stick to their investment risk budget and add stocks at low(er) prices.

Once I accept the overwhelming logic of a long-term disciplined investment plan, my concerns about this moment’s irrational market thoughts are cleansed by confidence.

As we enter what is historically a jovial and perhaps more illogicaler time of the year for the financial markets, let your well-reasoned long-term investment plan keep you on the rational side.
Quote of the week: Benjamin Graham: “The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be.”

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

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