Is It Smart to Buy Stocks With the S&P 500 at an All-Time High? History Has a Clear Answer


Determining the best time to invest your hard-earned money in the stock market can feel like a daunting task.

The common advice “time in the market beats timing the market” is easy to say but hard to follow when stocks trade near their all-time high as they do today. It might seem like stocks can’t possibly climb any higher after the S&P 500‘s (SNPINDEX: ^GSPC) incredible 70%-plus run since hitting a bear market bottom in 2022. For some, it may feel like another bear market could be right around the corner. After all, every bear market starts when the market hits a new high.

Investors who missed that 70% increase in stock prices may be sitting on the sidelines, waiting for that bear market to take hold before putting their cash to work. Investors who managed to stay invested up to this point may be feeling like they’re tempting fate and considering taking some money off the table.

But history has a clear answer for investors wondering whether it’s a smart idea to put your money in stocks right now.

A man with his hand under his chin looking off in thought while holding a tablet.
Image source: Getty Images.

The basic idea behind investing, especially investing in a broad-based index fund, is that stocks, as a group, increase in value over time. Economic progress and expansion isn’t always a steady march, but they typically move forward. As such, the companies that make up the economy see growing profits, and their stocks increase in value.

So, even if stocks are trading at an all-time high, the expectation going forward should be for stocks to set even higher highs in the future. Unless there’s a good reason to expect a big slowdown in the economy negatively impacting the earnings and cash flow of the businesses operating in it, stocks will continue to move higher in short order.

Indeed, new all-time highs tend to cluster together. That’s certainly been the case since the market set a new all-time high in January of last year. About 13 months later, the index has closed at a new all-time high 58 times.

If you had invested in an S&P 500 index fund when it first set a new all-time high in 2024, your fund would be up about 26% as of this writing. And while that’s a phenomenal return for just 13 months, it could be just the start for this market. The median bull market lasts 46 months. That gives us about a year and a half until the current bull market reaches the 50th percentile.

What’s more, despite the strong returns experienced in the first two years of the current bull market, they’re not entirely out of the ordinary. The median total return for a bull market is 110%, with the majority of that coming in the first half of the recovery from the previous bear market. That suggests the S&P 500 could climb another 23% from here, and it would still only be an average bull market.



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