The S&P500 ( $SPY (State Street SPDR S&P 500 ETF) or $SPX500 ) has been reaching new highs recently. Some would consider this to be the “worst” possible time to invest. However, investing after the S&P500 reaches a new peak, when analysing history, yields only slightly worse results than investing at other times.
Investing when markets are at all-time highs can be emotionally difficult for many investors. The hesitation often stems from a psychological fear of buying at the “top” — the idea that paying more than anyone ever has before is a setup for regret. This line of thinking typically leads to attempts at market timing: waiting for markets to dip before investing. However, consistently identifying market lows is nearly impossible, and avoiding highs can mean missing out on substantial long-term growth.
All-time highs in the stock market are far from rare. Since 1950, the U.S. equity market has hit over 1,250 record highs — averaging more than 16 per year. Rather than being warning signs, these highs often reflect underlying economic strength, rising corporate earnings, and long-term trends like productivity growth and innovation. Investors who worry about highs may be surprised to learn that investing only at those peak moments has still produced returns close to the long-term average of the S&P 500 — even through crises like the 1987 crash, the dot-com bubble, and the 2008 financial crisis. Please see below the graph by RBC Global Asset Management.
While sitting on the sidelines may feel safer during record-setting periods, doing so can lead to missed opportunities. Large corrections following highs are relatively uncommon: since 1950, the S&P 500 has experienced a drop of more than 10% within one year of a record high just 9% of the time. More importantly, when looking at 10-year returns after any high, the index has never ended a decade in negative territory. This historical resilience suggests that for long-term investors, the timing of entry matters far less than staying invested. Attempting to sidestep volatility may feel prudent, but over time, consistent participation in the market has proven to be the more rewarding strategy.
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Interpreting the data one step further suggests that ATHs are good opportunities to rebalance from the $SPX500 and into other assets classes which have been cyclically out of favours, only to rebalance into stocks again in a correction.
With Shiller's CAPE at 38% (and an earnings yield of mere 2.6%),... Show More
Indeed, it might be the case, though I have not seen nor done research on what would be the effect of cashing e.g. certain % from S&P500 allocation to some other asset (question is which asset ?) and wait until correction (again question defined as how many %)? Have you come across such research, it... Show More
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Mon Mar 09 2026 03:57:49 GMT+0000 (Coordinated Universal Time)
