Why Investing at Market Highs Still Wins
The Myth of Bad Timing: Investing at the Top
Many investors hesitate to put money into the stock market when it’s at all-time highs, fearing an imminent downturn. But history tells a different story. Even if you had the worst possible luck and invested at the peak of every market cycle since the 1970s, you would still have come out far ahead. This surprising truth underscores the importance of being a consistent buyer and holding your investments for the long term.
The Numbers Don’t Lie: Long-Term Growth Outpaces Volatility
Suppose you invested $100 in the S&P 500 at the start of 1970 and left it untouched, reinvesting all dividends. By the end of 2025, that $100 would have grown to over $27,000, a total return of about 26,911%, or an average annual return of 10.66%. Even after adjusting for inflation, your investment would be worth more than $3,100 today, a real return exceeding 3,000%. These gains occurred despite multiple bear markets, recessions, and geopolitical crises. The secret? Simply staying invested through thick and thin.
Market Highs Are Normal
It’s natural to worry about investing when the market is at a record high. Yet, since 1950, the S&P 500 has spent nearly 7% of all trading days at new highs. If you waited for a “better” time, you would have missed significant growth. Historically, the average one-year return after investing at an all-time high is 13.4%, and the five-year return is nearly 80%. Market highs are not ceilings, they’re often just new floors for future growth.
The Roller Coaster Analogy: Why Staying On Matters
Think of the stock market as a roller coaster. The only way you get hurt is if you jump off at the bottom when the ride is at its wildest and fastest. If you stay strapped in, the dips and loops become part of the journey, and over time, you’ll find yourself higher than where you started. Investors who panic and sell during downturns often lock in their losses and miss the powerful rebounds that follow. Missing just the 10 best days in the market over a 25-year period can cut your returns by more than half. Ironically, those best days often come right after the worst ones, making it nearly impossible to time the market successfully.
Time in the Market Beats Timing the Market
Emotional investing, driven by fear during downturns and greed during rallies, leads many to buy high and sell low, the opposite of what works. The most successful investors know that time in the market, not timing the market, is what builds wealth. Every attempt to outsmart the market increases trading costs, taxes, and, most importantly, the risk of missing out on long-term growth.
The Takeaway: Always Be a Buyer and Hold On
The lesson is clear: always being a buyer and holding your investments is the surest way to benefit from the stock market’s relentless upward march. The next time you’re tempted to wait for a “better time” to invest, remember, the best time to buy was yesterday, and the second-best time is today. Stay on the ride, and let the market work for you.
Disclaimer:
The information provided in this article is for general informational purposes only and does not constitute investment, financial, legal, or tax advice. While every effort has been made to ensure the accuracy of the information, First Shelbourne makes no guarantees regarding its completeness or reliability. Readers should consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. Investments involve risk, including the possible loss of principal. First Shelbourne is not responsible for any actions taken based on the information provided herein.