The stock market has spent the month notching one all-time high after another. Environments like these naturally make investors nervous. “All-time high” feels foreboding. There must be a sharp drawdown lurking around the corner. Perhaps a full-blown crash. Black Monday (1929), Black Tuesday (1987), the tech bubble popping (2000), the Great Financial Crisis (2008). Each one preceded by a new all-time high in the stock market. By definition, every crash was - and will be – ushered in by an all-time high.
But no one remembers the all-time highs that didn’t precede a drawdown. Given the stock market’s relentless long-run upward trendline, all-time highs are perfectly normal. They are not newsworthy. So we arrive at the seemingly counterintuitive phenomenon that forward returns following an all-time high are better than forward returns from any other day given at least a 6-month time horizon:
Note the data goes back to 1988 as that year marked the launch of the S&P 500 total return index allowing us to track returns with reinvested dividends.
We never recommend investing in stocks if you don’t have a minimum multi-year time horizon. But even over the short-term, the forward results from investing at all-time highs are… not too bad:
I wrote about this back in February of 2024. The S&P 500 closed at 5,005 the day the piece was published, a few days after closing above 5,000 for the first time. We heard all the same protests then. Should we really be buying stocks when the market just hit 5,000?
That was just over two years ago. Since then we’ve suffered a presidential election, the tariff tantrum, an ongoing war with Iran, and the closure of the Strait of Hormuz.
As I write this the S&P is trading over 7,500.
+55% since publishing that piece in February ’24.
There may be a crash lurking behind an upcoming all-time high. Perhaps pressure from the closure of the Strait of Hormuz finally overwhelms businesses’ earnings growth. Maybe the market can’t handle the massive IPOs on deck. There’s a chance AI trade is stretched and forward earnings following the AI CapEx buildout disappoint.
But there have always been reasons to believe the next crash is imminent. That this all-time high is the top. Most of the time it is not.
Any allocation to stocks (or any asset class for that matter) should be thoughtfully executed within the context of a financial plan. There are plenty of reasons to keep some dollars off the stock market roller coaster, but the market trading at all-time highs is certainly not one of them.
Sean Cawley, CFP ®
Sources:
https://www.resolutewealthmanagement.com/blog/investing-at-all-time-highs
“All Time Highs have been Great Times to Invest in the Stock Market.” Sam Ro, June 1, 2026.
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/
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This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.