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Investing at All-time Highs

| November 26, 2019
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The Dow Jones Industrial Average recently crossed 28,000 for the first time ever. With markets near all-time highs, let's pretend you have a decision to make -

You finally get that year-end bonus you've been waiting for and you'd like to invest it. But when? Do you wait for the market to drop? Or take your chances and invest your hard-earned bonus at higher prices? Deciding when to get into the market is one of the hardest decisions in investing and a conversation we have often with clients.

Human nature might tell us what goes up, must come down. And certainly, that can and does happen in the markets. But look at the data and you might find yourself thinking another thought, that objects in motion tend to stay in motion.

Since 1950, the S&P 500 has had a tendency to power past record highs. Just look at the average returns across different time periods following an all-time high (they tend to be good):

  

 

The point of this post is not to say whether or not you should invest at all-time highs. Every situation warrants it's own evaluation and more nuanced conversation. But rather, that you shouldn't always fear record-highs. Because as history shows, they have the tendency to lead to more record-highs.

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