A professional speaking with clients at a table

05/29/2024 — It’s been a bumpy ride for investors in the volatile equity bull market since the October 2022 low, mainly due to fears that the smoldering embers of inflation might reignite and force the Federal Reserve to keep interest rates “higher for longer”. However, since the bear market bottom in 2022, and despite the fear-driven volatility, the S&P 500® Index has returned nearly 52%, including a rise of more than 11% so far in 2024. As of this writing, the S&P 500 has reached its 24th all-time high this year.

S&P 500 Index forward performance by day

Whenever stocks go on a good run, investors may wonder if investing in a market at all-time highs is a recipe for disaster. It’s common for investors to turn apprehensive and stay on the sidelines during these spells, waiting for a pullback before putting new capital to work. Yet, historical data show that when markets have reached all-time highs in the past, it hasn’t necessarily indicated impending market drawdowns. In most cases, stocks have surpassed these records and continued to rise.

If there’s any recipe for disaster when it comes to investing, it’s in trying to time the market’s peaks and valleys. Long-term investors may feel skeptical about pouring savings into a frothy market, but staying invested and sticking to a long-term financial plan is the more prudent approach to allocating capital. For investors who interpret all-time highs as a contrarian signal to avoid stocks, history shows they will likely miss out on future gains.

It’s not unreasonable to assume that the current bull market can continue, given the resilience of corporate profits in the latest earnings season. Investors should remember that earnings are the fundamental backdrop to equity performance. Moreover, stocks are supported by several favorable tailwinds right now, including breadth and rising earnings-per-share estimates, which should lend support to the current market rally.

Investors should continue to focus on the long-term and not fear investing when markets are at all-time highs. Maintaining discipline through different market cycles and avoiding market timing are the keys to achieving enduring success as an investor.
Stay Focused:
Learn how news headlines can influence investor behavior.

Author(s)

Mark Hackett, CFA, CMT

Chief of Investment Research, Nationwide Investment Management Group

Mark Hackett is the Chief of Investment Research for Nationwide’s Investment Management Group, bringing more than 20 years of experience in the asset management industry to the role.

Full bio

Trending articles

In the coming years, more people will begin to think about the costs of health care in retirement and the possibility of needing long-term care (LTC) in the future, especially as the number of Americans reaching age 65 hits an all-time high this year.

Considerations for financial professionals on supporting retirees through economic uncertainty.

The Windfall Elimination Provision (WEP) is critical for financial professionals to understand.

Sources/Disclaimers

Except where otherwise indicated, the views and opinions expressed are those of Nationwide as of the date noted, are subject to change at any time and may not come to pass.

S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.

S&P Indexes are trademarks of Standard & Poor’s and have been licensed for use by Nationwide Fund Advisors. The Products are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s does not make any representation regarding the advisability of investing in the Product.