Stock markets reaching new highs can feel like a strange mix of reassurance and unease. On one hand, rising markets show that long-term investors have been rewarded for accepting the risks that come with owning shares. On the other, they can leave you wondering whether now is the wrong time to invest, or whether it might be sensible to take some money off the table.
That reaction is completely understandable. Your long-term savings are there to protect, and hopefully grow, your future spending power. So, when markets have already risen, it can feel natural to wait for a fall before investing, or to lock in recent gains before they disappear. After all, no one wants to invest just before a market setback.
The challenge is that what feels emotionally sensible is not always good investment behaviour. Moving in and out of markets means you have to get two very difficult decisions right: when to sell and when to reinvest. Getting that right once is hard enough. Doing it repeatedly over a lifetime is harder still. Even professional investors, with teams of analysts and constant access to information, rarely demonstrate an ability to time markets consistently.
A better starting point is to assume that markets are broadly efficient. In other words, today’s prices reflect the combined judgement of millions of investors processing new information in real time. Markets are not perfect, and they will fall from time to time. But current prices already include a huge amount of collective thinking about the future. Trying to outguess that collective view is usually a lower-probability strategy than staying invested in a well-diversified portfolio that is aligned with your long-term plan.
It is also worth remembering that all-time highs are not unusual. Over time, markets rise because companies innovate, make profits, reinvest, adapt and grow. If we expect shares to deliver positive long-term returns, then new highs are not a warning sign in themselves; they are part of how markets work.
Since 1990, developed stock markets have reached new highs more than 650 times. So, when a headline announces that markets have hit an all-time high, it is usually best met with calm perspective rather than panic. It is not a signal to abandon your plan. It is simply a normal feature of long-term investing.
Figure 1: Developed stock market returns and all-time highs, July 1990 to May 2026
Source: Albion Developed Stock Market Research Index, July 1990 to May 2026, daily returns in GBP. For illustrative purposes only.
Research from J.P. Morgan in 2020 found something that may feel counterintuitive. Looking at the S&P 500, investing on a randomly selected day between January 1988 and August 2026 produced a positive return over the following 12 months 83% of the time. Investing on the day of an all-time high produced a positive 12-month return 88% of the time. Average returns were also higher following market highs, including over three- and five-year periods.
Of course, this does not guarantee what will happen next. The next one, three or five years could look very different from the averages. But it does show that market highs are not automatically followed by market falls. New highs can be uncomfortable, but they are not, on their own, a reliable reason to change course.
The sensible approach is to build and maintain a portfolio designed for an uncertain world. That means spreading your money across different companies, regions and asset classes, and avoiding unnecessary concentration in any one area. It may also mean using a disciplined, evidence-based investment approach that tilts towards areas of the market expected to improve long-term outcomes, such as smaller and value-oriented companies.
Most importantly, your portfolio should be built around you. A good financial plan considers your goals, time horizon, need for return, tolerance for market movement and capacity to absorb losses. It also considers how much certainty you need, which is where the right blend of shares, bonds and cash becomes so important.
Market falls are expected. They are not pleasant, but they are planned for. A robust financial plan and cashflow model should allow for downturns, periods of poor returns and changing economic conditions. What we cannot do is predict exactly when those falls will happen. Markets reaching all-time highs does not give us that answer.
Stay invested. Stay disciplined. Let your plan do the heavy lifting.
Important notes
This document is for educational purposes only and discusses general investment-related themes. It does not constitute personal financial advice, investment advice or an arrangement to invest. The information included reflects the opinion of the authors at the time of writing and may change without notice. Past performance is not a reliable guide to future returns. The value of investments can fall as well as rise, and you may get back less than you invest.
Products referred to in this document
Where specific products, indices or investment approaches are mentioned, they are included solely to support the educational discussion. They should not be treated as a recommendation, endorsement or due diligence assessment of any product, fund, platform or investment strategy.
