Ask Matt: Are new highs bullish?

Q: Are new highs bullish? 

Investors have lots to celebrate. The Nasdaq Composite index notched its first all-time high last week since July 20, 2015. The Nasdaq had lots of company. The tech-heavy index joined the Standard & Poor's SmallCap 600 and the S&P 500 to bust to record highs. Last Friday was the first time the Nasdaq, S&P 500 and S&P SmallCap 600 hit all-time highs on the same day since April 21, 1998, says Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence. The event of all three indexes hitting all-time highs on the same day has only happened 173 times since 1978.

Investors love the confirmation of new highs, but the fact is, when other investors are paying up for stocks, future returns can be disappointing, at least using history as a guide. In the three, six and 12 month periods following the Nasdaq, S&P 500 and S&P SmallCap 600 hitting new highs on the same day, returns were subpar. Stocks were still higher in those subsequent periods, but by less than usual. When stocks hit highs, history says it's wise for "investors to temper their enthusiasm," Stovall says.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.