One of the well-known mantras within the funding world is to “purchase low and promote excessive.” With the S&P 500 setting document after document in 2025 — and valuations reaching stratospheric ranges — it’d seem to be shopping for now could be the precise unsuitable factor to do.
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However there are nonetheless compelling causes to remain out there, even at all-time highs. Right here’s why — and the way you are able to do it.
Markets don’t go up in a straight line, however historical past exhibits the S&P 500 has all the time gone on to make new highs, regardless of how extreme a bear promote it endures. The truth that the index is at an all-time excessive as of July 2025 implies that by definition, all of its previous dangerous days and dangerous years are actually within the rear-view mirror. Traders who’ve held on — and even added to their positions — throughout prior downturns have been handsomely rewarded with the very best worth within the index’s historical past.
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Technical analysis interprets previous buying and selling patterns to foretell future market actions. Many technicians view a brand new market excessive as a “breakout,” indicating future upside to return. Quite a few different components will help assist this prediction, akin to rising buying and selling quantity and rising market breadth, however in its most simplistic type, technical evaluation normally views a contemporary market excessive as a sign that costs will proceed to go larger.
When you may all the time purchase on the inventory market’s low and promote at its excessive, sure, you’d have a fantastic buying and selling document that might considerably outperform the general market. However historical past, together with the shattered portfolios of quite a few merchants earlier than you, exhibits that doing that constantly is all however not possible.
A extra seemingly state of affairs is that you just emotionally panic and promote your positions when the market is crashing after which begin investing once more after the market has made vital features — proper earlier than the following bear market.
One other frequent state of affairs is that you just worry the S&P 500 is “overvalued” and also you promote all of your positions because the market goes larger and better. Lacking out on even a couple of of the perfect days out there is sufficient to preserve your portfolio in a perpetual state of underperformance, nevertheless it’s a comparatively frequent prevalence amongst these making an attempt to time the market.
Investing at market highs is one thing of a double-edged sword. On the one hand, it’s a good time to be invested within the S&P 500, as a result of it means your portfolio also needs to be at all-time highs. Nonetheless, it will also be a bit nerve-wracking as a result of valuations are stretched to their restrict, and the market is “priced for perfection” — that means every part has to proceed doing properly to assist these lofty costs. As worry of shedding cash is mostly better for traders than the enjoyment from profiting, it’s pure to really feel a bit queasy when market costs are excessive.
