When the stock market reaches new highs, it can trigger a wave of mixed emotions for investors. On one hand, hitting record levels feels like progress. On the other, it can spark anxiety: “Is this the peak? Should I wait before investing?”
The truth is, market highs aren’t the red flags many fear. History shows that new highs are simply part of a healthy, long-term trend. Let’s break down the psychology behind this fear and why staying invested matters more than trying to time the market.
The Mental Math That Misleads Investors
A common myth is that buying at a market high automatically means buying at the wrong time. Data suggests otherwise. Over the decades, investors who bought at highs have often seen similar or even better returns compared to those who waited for pullbacks.
The key? Markets tend to climb higher over time. What feels like “overpaying” today often looks like a bargain years later.
Anchoring Bias: Why Yesterday’s Prices Stick in Your Head
One reason highs feel uncomfortable is anchoring bias — the tendency to compare today’s price to a lower past price. Investors think, “I could’ve bought it cheaper before” and hesitate to act.
But successful investing isn’t about finding the lowest entry point; it’s about staying invested long enough to capture long-term growth.
We Remember the Crashes, Not the Climbs
Another psychological trap is loss aversion. Investors tend to recall market crashes vividly, but rarely remember the long stretches of steady growth.
This focus on the negative skews decision-making, making highs feel more dangerous than they actually are. Historically, however, the market spends far more time rising than falling.
The Illusion of Control
Many investors believe waiting on the sidelines gives them more control. In reality, sitting out often costs more than staying invested. Missing just a handful of the best-performing days can dramatically reduce long-term returns.
For example, a $10,000 investment in the S&P 500 over 20 years grew far larger for those who stayed fully invested compared to those who missed even the top 10 best days.
The Real Lesson: Trust the Process
Market highs aren’t signals to panic. They’re proof that the system works — companies innovate, economies expand, and markets trend upward over time.
The best strategy isn’t about timing the perfect entry. It’s about trusting the process, sticking to a disciplined plan, and letting compounding do its work. That doesn’t mean we sit on our hands! Learn more about our process here.
✅ Key Takeaway: Don’t let emotions drive investment decisions. Market highs are milestones, not warnings. Long-term success comes from consistency, patience, and strategy — not short-term reactions; however, that doesn’t mean the short-term doesn’t matter. Check out the Retirement Shift to see how we handle the short-term when it comes to retirement income specifically.