The American stock market has hit more than twenty record highs this year, and we’re barely into June. It set the latest one on Monday, shrugging off the hottest inflation reading in nearly three years and a war in the Middle East. As I write, it’s sitting a whisker below the next one.
So, naturally, the question I get most is whether now is a terrible time to start.
It’s a fair question. Everything looks expensive. The sensible-sounding voice in your head says wait for the dip, buy when it’s cheap, and don’t be the mug who piles in at the top.
I understand the instinct, but it’s wrong.
Buying at a record high has, historically, been a slightly better than average idea.
Not a worse one. Better.
JPMorgan ran the numbers back to 1988. If you’d only ever bought the S&P 500 on days it stood at an all-time high — supposedly the worst possible timing — you’d have done a shade better over the next one, three and five years than if you’d bought on a random day.
Five years out, you’d have made 81% buying on the all-time top days, against 75% buying on normal days.
It isn’t a trick. Markets go up more often than they go down, so they spend most of their lives at or near a high. A record isn’t a ceiling the market bangs its head on. New highs lead to more new highs far more often than they lead to ruin.
You don’t need the market to crash before you buy.
Could it fall from here? Of course. It might fall the week after you buy. It’s expensive, the headlines are grim, and anyone who tells you what happens next is just guessing.
But watch what the waiting actually does. It doesn’t buy you a cheaper price — it just keeps you out, because the dip never quite arrives. And when it does, you’ll be more frightened than you are today, not less. A falling market feels far worse than an expensive one.
Nobody selling financial products will say this plainly, so I will.
Forget trying to time the market. You win by being boring: buy a cheap fund that tracks the whole market, put money in regularly, and stop checking whether today was a clever day to buy. The day you buy barely matters.
I sacked my financial adviser years ago and have run my own money ever since. The most useful habit I have isn’t a clever call — it’s refusing to let the market’s mood decide whether I invest. The headlines are always frightening. There’s always a reason to wait.
Is now a terrible time to start?
The figures say not. Even though the price is high at the moment, it could be even higher next week, and higher still the week after — the market goes up more than it goes down. And then you’ll be kicking yourself for the growth you’ve missed out on.
The dip you’re waiting for may never come. And all the time you’re waiting for it, you’re out of the market. You think you’re being smart, waiting for a better deal, but the numbers show you’re actually better off by buying at the highs.
The record high isn’t the risk. The waiting is.
This is what I write about: helping people who suspect they should be doing something with their money finally get on with it — without paying someone 1% a year to hold their hand. It’s free!
This is what I think and what I do, not financial advice. I’m not a regulated adviser and I don’t know your circumstances. Investments can fall as well as rise, and the past is no promise about the future. The decision is always yours.