It’s a natural reaction. When you hear that the market has reached a new high, it can feel as though the only way is down.

But history tells us a different story and understanding that history can make a world of difference to your confidence as an Investor.

All-Time Highs Are Normal – Not a Red Flag

Since 1926, the US stock market has hit a new all-time high roughly one in every three months. That’s around 30% of the time – surprisingly frequent, isn’t it?

While headlines tend to treat these moments as rare “peaks”, the truth is they’re a completely normal part of long-term Investing.

And what happens next?

Interestingly, markets have often gone on to do better than average. In the 12 months following an all-time high, returns have averaged around 10.3% above inflation, compared to 8.6% at other times. The same pattern holds true over longer periods too.

In short: new highs aren’t warnings. They’re often signs of progress.

The Cost of Sitting on the Sidelines

It’s tempting to think, “I’ll just wait for a dip.” A perfectly human thought but one that can come at a steep cost.

If you had invested $100 in the US stock market in 1926 and simply stayed invested, by the end of 2023 that $100 would have grown (after inflation) to around $85,000 – an average annual growth rate of 7.1%.

Now, imagine doing the opposite: selling every time the market hit a new high and sitting in cash until it “felt safe” to get back in. That same $100 would have grown to just $8,790, a return of only 4.7% per year – nearly 90% less.

This is the danger of trying to time the market, instead of trusting the plan.

Keep Perspective, Stay the Course

It’s okay to feel uneasy – we all do, from time to time. The news cycle doesn’t help, often turning normal market movements into headline-grabbing drama.

But if your Investment plan is built around your goals whether that’s Retirement, family security or Financial Freedom, then a market high isn’t a cue to pause. It’s just another chapter in the long-term story of markets rising over time.

The Bottom Line

Your job isn’t to predict what happens next. It’s to stay invested long enough to let your plan do its work.

And if you ever feel unsure, or simply want to talk things through, that’s exactly what we’re here for.

Important Note 

This research relates specifically to the US large-cap stock market from 1926 to 2023. Past performance isn’t a guide to the future and the value of Investments can fall as well as rise.