The S&P 500 trades near all-time highs, triggering the familiar debate: Is this a buying opportunity or a warning sign?
History suggests the former. J.P. Morgan research analyzing S&P 500 returns since 1970 found that investing at all-time highs resulted in average returns of 9.4 percent over the subsequent 12 months—slightly better than the 9 percent average when investing at non-highs.
The dot-com crash (2000-2002) erased 50 percent from peak to trough. The Great Recession did worse. Yet both appear as minor dips on a decades-long chart. Investors who held through those collapses and kept buying recovered fully and moved on to new highs.
The mechanics are simple: a disciplined buy-and-hold strategy, executed through either the SPDR S&P 500 ETF (SPY, expense ratio 0.09 percent) or the Vanguard S&P 500 ETF (VOO, expense ratio 0.03 percent), eliminates timing risk. Panic selling during downturns—the killer of returns—becomes irrelevant when you have no intention of selling.
The real cost of record valuations isn't the headline level; it's the emotional toll of watching a portfolio shrink 30 to 50 percent without flinching. Most investors fail this test. Those who don't—who stick to a plan regardless of price—have historically beaten those who trade around the noise.
