• The S&P 500 Index recently breached 5,000 for the first time and has hit new all-time highs multiple times in recent trading days.
• Intuition would likely say that new all-time highs for stocks would portend lower returns going forward due to elevated valuations, a peak in earnings growth, or maybe frothy investor sentiment.
• It’s common for investors to be nervous about putting new money to work with markets at or near all-time highs.
• Data shows that this worry may be misplaced, as investing in the S&P 500 at all-time highs led to higher returns over time than if money was invested on days when the index was not at a peak (see chart).
• The usual caveat that past performance does not guarantee future results is especially true here. The dominance of US mega-cap tech companies that have driven indexes should slow at some point, but has been costly to bet against for longer than many expected.

Sources: JPMorgan; https://www.jpmorgan.com/content/dam/jpm/securities/documents/cwm-documents/Is-it-worth-considering-investing-at-all-time-highs.pdf

A Wealth of Common Sense; https://awealthofcommonsense.com/2024/02/all-time-highs-usually-lead-to-more-all-time-highs-in-the-stock-market/