Sometimes markets seem to race from one high point to the next. At times like these, investors may face what some refer to as ‘psychological barriers to entry.’ They may question whether it’s the best time to put new money into the market. After all, investing at all-time highs means paying a price that no one has ever paid before – creating a seemingly guaranteed recipe for regret. This kind of thinking is linked to trying to time the market. Investors who do this try to avoid market highs and buy at market lows. But timing the market is almost impossible to get right. And, all-time highs are not uncommon – so you would be missing out on a lot of opportunity if you tried to avoid them. 

 

What do market highs mean for investors?

 

New market highs are not as meaningful as some people may think. Often they have to do with continued growth of the economy and corporate profits. While there are periods of time when the economy and markets slow down, over time improvements in productivity and innovation have continued to propel markets towards new highs. This can generate strong long-term results for investors, as long as they stay invested.

 

Nevertheless, when markets are sitting near all-time highs, many investors still can’t help but feel a bit uneasy about putting new money to work. Some investors make the decision to remain in cash and wait for a large correction before they invest. However, often times a significant correction never comes, leaving the investor with the regret of missing out on investment returns.

 

Time provides perspective for long-term investors

 

There’s no way of knowing what lies ahead in the near term. What history tells us is that stocks tend to move higher over the long term. New highs are a normal occurrence and don’t necessarily warn of an impending correction. They may in fact signal that further growth lies ahead.