Should I Invest When Markets are at All-Time Highs?

Benjamin Haas |

When stock markets are hitting all-time highs, we often get asked the question, “is now still a good time to invest?” Our simple answer is that as long as you have a long enough time horizon to ride out any potential short-term volatility, then investing now is a close second to starting yesterday, 😊. 

All-time highs are a common occurrence in healthy and growing markets. Historically speaking, the US stock markets have always reached new highs. It’s often a matter of when, not if, but the fear of investing at peak levels is a natural response, driven by the concern of potential downturns. The key perspective is having a long-term approach, typically extending beyond one or two years. Over extended periods, the timing of entry into the market becomes less critical, highlighting the importance of patience and discipline. I’m sure you’ve heard the saying “it’s time in the markets, not timing the markets” that leads to consistent investment growth over time. 

One way to smooth out some of the short-term impacts of saving and investing is implementing a dollar-cost averaging strategy, especially during periods of all-time highs. This involves regularly investing a fixed amount regardless of market conditions. A good example of this is contributing to an employer retirement plan (401(k), 403(b), SIMPLE IRA, etc.). This strategy helps reduce the impact of market timing. It spreads investments over time and minimizes the risk associated with making lump-sum investments at a single point. Diversifying your investment portfolio across different asset classes and industries is another way to smooth out your experience, especially during market highs. While one segment of the market may be at an all-time high, others may not, providing a balanced approach to managing risk. 

Now here’s the hard part! Media and headline news often amplify market events, creating a sense of urgency or fear among investors. Politics, wars, interest rates, inflation, national debt – these are all legitimate reasons why the market could retreat at any given time. Our guts may tell us to wait to invest, and that would be a normal response. Yet, it is crucial to filter out this noise and stay focused on long-term financial goals, avoiding knee-jerk reactions to short-term market fluctuations. Investing is as much a psychological and emotional exercise as it is financial. A great way to tune out the noise is to focus on your big-picture investment strategy and financial goals rather than reacting to daily news. 

Lastly, understanding your risk tolerance is crucial, especially during periods of market highs. Reassess your portfolio's risk level, ensure it aligns with your long-term financial goals, and be prepared for short-term fluctuations without panicking. Market corrections are a natural part of the investing cycle. All-time highs may be followed by short-term corrections and while past performance does not guarantee future results, historically the US stock markets have always reached newer highs. 


Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice. 

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