Is Investing at All-Time Highs a Sensible Strategy?
Investing in the stock market can seem daunting, especially when markets hover at all-time highs. Many investors worry that they might be "buying at the top," only to experience a correction shortly thereafter. However, historical data, fundamental investing principles, and the long-term trajectory of the global economy all suggest that investing at market highs is not only safe but also potentially highly profitable. I have said many times in my career that “only investing when markets are at all-time highs” is a much better strategy than “selling the market when it is at all-time highs.” Our clients remain fully invested to their target asset allocation, as these markets continue to climb higher. If you're a potential investor sitting on the sidelines waiting for a dip, you may be missing out on continued market strength. Let’s explore.
Market Highs Are Normal and Frequent
A big misconception about stock market highs is that they are rare and must be followed by a downturn. In reality, markets reach new all-time highs regularly. In fact, for long-term investors, this is exactly what you'd want a healthy market to do—keep moving higher over time.
According to research from JP Morgan and data from the S&P 500, the U.S. stock market has reached hundreds of new all-time highs over the past few decades. From 1980 to 2020, for example, the S&P 500 recorded over 1,000 new highs. Each of these highs might have seemed like a dangerous peak at the time, but they were almost always followed by even higher highs in the years ahead.
Source: FactSet, Standard & Poor’s, J.P. Morgan Asset Management. Data as of 9/10/2025. (Left) Market floor is defined as an all-time high from which the market never fell more than 5%. (Right) *"Invest on any day" represents average of forward returns for the entire time period whereas "Invest at a new high" represents average of rolling forward returns calculated from each new S&P 500 high for the subsequent 3-month, 6-month, 1-year, 2-year, 3-year and 5-year intervals, with data starting 1/1/1988 through 12/31/2024.
If investors avoided the market every time it hit a new high, they would have missed out on substantial long-term gains. The key highs to avoid, of course, are those that come before significant drawdowns or corrections. This question is so important to me that I have spent most of my career developing methodologies that attempt to determine the difference between a “healthy” all-time high from one that might be signaling that a more sinister pullback may be in the offering.
The stock market is inherently volatile in the short term, but it has shown consistent growth over long periods. Since its inception, the S&P 500 has delivered average annual returns of approximately 10%, including both bull and bear markets. This means that even if a correction or downturn follows a high, long-term investors typically recover those losses and go on to profit significantly, if they have enough time. For example, an investor who bought into the market just before the 2008 financial crisis—and saw their portfolio drop by over 35%—would still have experienced a full recovery in about 5 years. Even the generational tops of the Nifty-Fifty in the early 1970s and the tech bubble of 2000 “only” took about a decade to recover losses.
Sources: Clearnomics, Standard & Poor’s
Today’s All-Time Highs: A Guide
We find ourselves today near all-time highs with many concerns to consider. While we know that headlines can influence stock markets, we also have to understand how markets have historically acted at this point in the economic cycle. Only then can we decide whether we should be positioned.
I have done much research on market and economic cycles dating back to the 1960s. Patterns have emerged on how markets handle news. We now seem to be in a market cycle where stocks historically reward good news while also taking bad news in stride. Here are some recent examples of both pulled from headlines.
Resilience:
In early April 2025, the market took a sharp dive: massive tariffs announced on "Liberation Day" precipitated steep losses, with the Dow and S&P plunging over 10%. Yet, markets rebounded swiftly. As Goldman Sachs noted in mid 2025, markets continued climbing despite geopolitical and trade uncertainties.
According to J.P. Morgan, each new tariff headline triggered less negative reaction than before—signaling decreased investor sensitivity and rising confidence that threats were more strategic than catastrophic.
Tech companies, notably the "Magnificent Seven," have led the charge—with stocks like Nvidia, Meta, and Microsoft showing especially strong performance, even as others lagged.
Analysts forecast further gains. Evercore ISI raised its S&P 500 target citing AI, favorable Fed policy and fiscal stimulus. Oppenheimer expects tech and AI to drive markets upward amid continued uncertainty.
Markets hit record highs driven by weaker-than-expected jobs data, fueling expectations of Fed rate cuts—most likely 50-75 basis points for calendar year 2025.
Worry:
Despite strong earnings from pockets like Broadcom, concerns linger over inflation, small-cap valuations, and fatigue in big tech expansion.
One investor forum noted markets climbing as “worries about trade and geopolitics fade,” dubbing it literally “climbing another wall of worry.” Still, the sentiment is fragile, with valuations and macro risks persistently discussed.
Goldman Sachs even warned of a 30% chance of a sharp correction, cautioning that stocks remain “priced for perfection” despite lingering doubt.
Investing in the stock market when it’s at all-time highs may feel counterintuitive, but historical data and sound financial principles suggest it is often the right move for long-term investors. All-time highs are part of the market’s natural upward progression, not signs of imminent collapse. It is why we firmly believe that we are in a market which is climbing a wall of worry and one which will reward those investors who are positioned for continued market strength despite some angst.
Knowing where you are in the economic and market cycle is imperative, as it allows for the potential for proper positioning in the overall portfolio. At Elyxium, we are now recommending that clients have a slight overweight allocation to equities in their portfolios. We are recommending that clients sell a small portion of their bonds, putting proceeds in Small Cap and International. We also are making a manager change in the emerging market portion of client portfolios.
Sources: Clearnomics, Standard & Poor’s
Conclusion
All the signs point to the market indeed climbing a wall of worry. From trade fears and elevated valuations to inflation risks and geopolitical tensions, markets have advanced steadily by focusing on forward-looking fundamentals—AI innovation, rate-cut expectations, strong corporate earnings, and resilient investor behavior. Our work, which studies markets over the past six decades suggests that our updated positioning will allow our clients to fully participate in this continued market advance.
Elyxium Wealth LLC (“the FIRM ”) is a registered investment adviser located in Beverly Hills, California. The FIRM may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.
This presentation is limited to the dissemination of general information regarding the FIRM’s investment advisory services. Accordingly, the information in this presentation should not be construed, in any manner whatsoever, as a substitute for personalized individual advice from the FIRM. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Any client examples were hypothetical and used to demonstrate a concept.
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