Historical data reveals investing in the S&P 500 at record levels yields slightly higher average returns over 12-24 months.
The S&P 500 has climbed over 12% year-to-date, nearing multiple all-time highs in August. Investors holding cash face uncertainty over whether to buy now or wait for a pullback that may not materialize.
Analysis of S&P 500 returns since 1970 shows that investing at all-time highs has outperformed non-high periods. Over the next 12 months, returns averaged 9.4% at record levels versus 9% otherwise. Over two years, the gap widens to 20.2% compared to 18.5%.
The trend suggests all-time highs often signal market strength rather than overvaluation. Long-term upward momentum typically leads to repeated record levels during bull markets.