Earlier this month, we hit the two-year anniversary of the start of the current S&P 500 bull market. It’s fair to say it’s been an incredible two years for investors – over this period the stock market index has risen about 60%.
Is it time to bank some profits for my ISA after this huge bull market run? Let’s discuss.
My S&P 500 stocks
I own quite a few S&P 500 stocks in my portfolio. Currently, I’ve got large positions in ‘Magnificent 7’ stocks Amazon (NASDAQ: AMZN), Apple, Nvidia, Alphabet, and Microsoft.
I’ve also got substantial positions in payment giants Mastercard and Visa. On top of this, I’ve got shares in Uber, Airbnb, KLA Corp, Lam Research, Coca-Cola, Edwards Lifesciences, and Estée Lauder.
So overall, I’ve got quite a bit of exposure to the index.
Tons of potential
Now, many of these stocks currently sport lofty valuations. A lot of them have risen significantly over the last two years.
Yet I’m a long-term investor with a 15+ year investment horizon. And taking a long-term view, I continue to believe that most of these stocks have tons of potential. Take Amazon, for example. Looking at what’s going on within the company today, I can see the stock rising much higher in the years ahead.
Today, Amazon’s making big moves in the digital advertising space. This could significantly boost its revenues and profits in the years ahead as digital ads can be very lucrative.
It’s also making major moves in the satellite broadband industry through its Project Kuiper initiative. The goal here is to bring fast, affordable broadband to unserved and underserved communities around the world.
Of course, Amazon’s operating in the artificial intelligence (AI) space too. Amazon Bedrock, for example, allows companies to build their own unique AI models (like ChatGPT).
So while the stock’s up about 120% over the last two years, I don’t think it would be wise for me to sell it today. Over the next five to 10 years, I can see it rising substantially from current levels.
Of course, if my time horizon was shorter, my attitude would probably be different. For example, if I was looking to retire in two years, I might consider banking some profits from the stock today.
That’s because it can be quite volatile at times. If earnings were to come in below expectations due to investments for growth (Amazon posts its Q3 earnings later this week), or sentiment towards tech stocks deteriorated, its share price could fall 10-20% in the blink of an eye.
Given my time horizon however, I’m happy to hold on to it for now.
This bull market has further to run
I’ll point out that I wouldn’t be surprised to see some volatility in the S&P 500 in the months ahead. In early November we have the US election, and stocks are usually volatile before this event.
Meanwhile, there are plenty of other factors that could rattle the markets in the near term, including geopolitical conflict and economic data.
I expect the general trend for the S&P 500 to remain up however. Given that we’re in the midst of a technology revolution, I reckon this bull market has legs.
