A market at an all-time high feels like the worst moment to buy, but the data says otherwise. New highs are a normal feature of a rising market, and money put to work at an all-time high has historically earned forward returns about as good as money invested on any random day, sometimes better. Waiting for a dip usually costs you more than it saves.
Key takeaways
- All-time highs are common, not rare. The S&P 500 set 1,325 record highs between 1950 and August 2025, an average of more than 17 a year, according to RBC Global Asset Management.
- Buying at a high has not hurt long-term returns. J.P. Morgan found that since 1988, the average one-year total return after investing on an all-time-high day was higher than after investing on a random day.
- Waiting in cash is the expensive mistake. Schwab's research shows that even perfectly bad timing beat sitting on the sidelines by a wide margin.
- Putting money in all at once has beaten spreading it out about two-thirds of the time, per Vanguard.
- The honest caveats still matter: high valuations can mean lower future returns, and investors near retirement face sequence-of-returns risk. This is about time in the market, not a guarantee.
Why all-time highs cluster (and why the fear is backwards)
Markets trend up over long periods. When something trends up, it spends a lot of time making new highs, the same way a climber setting a personal-best altitude keeps setting new ones on the way up the mountain. Record highs are not a signal that the market is out of room. They are what a healthy uptrend looks like from the inside.
The fear of "buying at the top" assumes every high is a peak. Most are not. Since 1950 the S&P 500 has hit more than 1,300 all-time highs, so if you had refused to invest whenever the market was at a record, you would have sat out a huge share of the best trading days in modern history.
The data: investing at a high vs. any other day
Two of the most-cited studies land on the same conclusion from different angles.
| Study (period) | What it measured | Invest at an all-time high | Invest on any/other day |
|---|---|---|---|
| J.P. Morgan (since 1988) | Average 1-year total return | +14.3% | +11.9% (any day) |
| RBC Global Asset Management (1950-2025) | Average 5-year annualized return | 10.5% | 11.4% (all other days) |
Read the table honestly. J.P. Morgan's data shows the one-year return after a record high actually beat a random day. RBC's five-year numbers run slightly the other way, with all-time-high entries returning a touch less than the all-day average. The takeaway is not that highs are magic. It is that highs are roughly ordinary. RBC also found that in the five years following any all-time high since 1950, the index has never finished down more than 10%, and a correction greater than 10% within a year of a high happened only about 9% of the time. Ben Carlson of Ritholtz Wealth Management has run the same exercise on data back to 1926 and reached a matching result: returns after record highs are close to, and sometimes better than, returns after any other month.
Why waiting for a dip underperforms
The "I'll wait for a pullback" plan has a hidden cost. While you wait, your cash earns little and the market often keeps rising, so the dip you finally buy can sit above the price you passed on.
Schwab's Center for Financial Research put numbers on this. It followed five investors who each received $2,000 a year for 20 years to put into the S&P 500. The perfect market timer, who somehow bought the exact yearly low every year, finished only about $15,522 ahead of the investor who simply invested on the first day of each year. The investor who left the money in cash waiting for the right moment trailed even the worst timer, who bought at each year's high, by roughly $103,986. Perfect timing was worth a little. Waiting was worth a lot, in the wrong direction.
The same logic favors lump-sum investing over dollar-cost averaging when you already have the cash. Vanguard's research found that investing a lump sum immediately beat spreading it over 12 months about two-thirds of the time (roughly 68% in U.S. data), for the simple reason that markets are up more years than they are down, so money sitting on the sidelines usually gives up return. Dollar-cost averaging is still a fine way to invest steady income as it arrives, and it lowers the odds of a bad-luck entry, but on average it leaves money on the table. If you want the broader case for staying invested in the index, see our look at beating the S&P 500 and how a financial advisor stacks up against the S&P 500.
The honest caveats
None of this means "always in, no matter what." Three real qualifiers:
- Valuations affect the odds. When the market trades at a high cyclically-adjusted price-to-earnings (CAPE) ratio, history suggests lower average returns over the next decade. High valuations do not tell you when a drawdown comes, but they lower the base rate for forward returns. An all-time high in price is not the same thing as a stretched valuation, so judge them separately.
- Sequence-of-returns risk near retirement. If you are drawing down a portfolio, a large loss in the first few years does far more damage than the same loss later, because you are selling shares to fund spending. Someone five years from retirement should think about asset allocation and cash buffers, not just long-run averages.
- This is about time in the market, not a promise. Averages describe the past. Any single year can be sharply negative, and the studies above show ranges, not guarantees. Your time horizon and cash needs decide how much of this applies to you. It also helps to be clear on where you stand between building a cash reserve and putting money to work, which our saving vs. investing guide walks through.
Bottom line
All-time highs are a normal byproduct of a market that rises over time. The evidence, from J.P. Morgan, RBC, Schwab, and Vanguard, points the same way: investing into a high has historically produced returns close to or better than investing on a random day, and waiting for a cleaner entry usually costs more than it saves. Mind valuations and sequence risk near retirement, then let time in the market do the work. For more on building a durable long-term portfolio, start with our investing hub.
This article is for information only and is not financial, investment, or tax advice. Historical returns do not guarantee future results. Consider your own situation and consult a qualified professional before making investment decisions.
Frequently asked questions
How often does the S&P 500 hit all-time highs?
All-time highs are common, not rare. The S&P 500 set 1,325 record highs between 1950 and August 2025, an average of more than 17 a year, according to RBC Global Asset Management. Record highs are what a healthy uptrend looks like from the inside, not a signal the market is out of room, since most highs are not peaks.
Does buying at an all-time high hurt long-term returns?
No, buying at a high has not hurt long-term returns. J.P. Morgan found that since 1988 the average one-year total return after investing on an all-time-high day was 14.3%, higher than the 11.9% after a random day. RBC's five-year numbers run slightly the other way at 10.5% versus 11.4%, so highs are roughly ordinary rather than magic.
Is it better to invest a lump sum or wait for a dip?
Investing right away has generally beaten waiting. Vanguard found lump-sum investing beat spreading money over 12 months about two-thirds of the time, since markets are up more years than down. Schwab's research showed an investor who left money in cash waiting trailed even the worst market timer by roughly $103,986 over 20 years. Waiting usually costs more than it saves.
What are the caveats to investing at an all-time high?
Three real caveats apply. High valuations, measured by a stretched CAPE ratio, suggest lower average returns over the next decade, though an all-time high in price is not the same as a stretched valuation. Investors near retirement face sequence-of-returns risk, where an early loss does outsized damage. And averages describe the past, so any single year can be sharply negative.