Though the equity market has experienced bouts of volatility in 2026, major indexes continue to touch upon all-time highs. This has caused some investors to exercise caution and question whether they should continue to invest while markets are at, or near, such record levels. So today’s weekly market commentary takes a look at historical data to make the point that investors should in fact “cheer” rather than “fear” when investing in markets that are hitting all-time highs.
The enclosed chart tracks the performance of the S&P 500 Index when investing at record highs. The chart goes back to 1954 and continues on to present day. The years where the S&P 500 Index reached a record high are listed, and the blue bars represent the number of record highs which were reached during each year (left axis). The orange diamonds then represent the next 12-month return of the S&P 500 Index (right axis). And finally, the average next 12-month return is represented by the light blue horizontal line.
As can be seen from the data, the S&P 500 Index reaching an all-time high historically has not been a headwind for future returns. In fact, in most cases, the next 12-month return (orange diamonds) is in fact positive, with an average next 12-month return of almost 10%. And looking more recently, if investors had stayed away from the stock market due to all-time highs, they would have missed tremendous upside. Since 2013, the Index reached new highs 461 separate times. And during that period of time, the Index had cumulative returns of over 400%.
The piece elaborates to explain, “this track record also highlights an important nuance that can be lost to recency bias. A new all-time high for the S&P 500 neither guarantees further gains nor signals an imminent peak. Instead, it underscores a wide range of potential outcomes – where forward returns can vary meaningfully, even as the overall bias remains to the upside, as reflected in the average forward return of roughly 10% (see chart).” – NFM-25541AO (06/26)
And the takeaway from the piece and the data is that, “investors should view all-time highs as part of the market’s price discovery process, where expectations are continually recalibrated in response to evolving fundamentals and valuation dynamics, and the broader macro backdrop. In this environment, delaying investment decisions can quickly turn into market timing. A more effective approach is to maintain a disciplined, diversified rebalancing strategy – helping investors stay aligned with long-term goals.” – NFM-25541AO (06/26)
We would ask that you review the attached piece at your convenience and please let us know if you have any questions or if you would like to discuss it further. And as we always end this correspondence, please remember that regardless of current momentum and regardless of the key takeaways in this weekly perspective, we will continue to monitor and manage with a thoughtful approach based on your specific long-term objectives. Thank you for your continued confidence and look forward to speaking soon.
