Is it bad to invest at an all-time high?

Chasing the top

With the current rally in stocks, it’s easy to feel like the best chance to buy is long past. Worse yet, with market levels now approaching an all-time high, it’s even scarier to invest for fear that another drop is right around the corner. It’s easy to think that way - if stocks are at their peak, isn’t down the most likely place to go?

Using the same approach I wrote about yesterday, I took a subset of all stock data going back to 1928 that only captured investments made on days the stock market was at an all-time high. I then compared it to investments made at any point (all-time high or otherwise):

I was honestly surprised by this result. I expected investment performance to be significantly lower when someone invests at an all-time high. But, at least in the first five years, there is no difference in probability of turning a profit.

That changes a bit in the long-term. On that end, there is a more noticeable difference. But, it still isn’t that crazy different in my opinion. So, if you are worried about seeing a loss on your investment but want to invest when the market is at an all-time high, my suggestion is to not worry about it too much!