Should you be afraid of all-time highs?
Should you be afraid of all-time highs?
This week the UK market hit an all-time high with the FTSE 100 breaking through 9,000 for the first time ever. The US market has also returned to all-time highs, albeit not once you account for dollar weakness, and a number of European markets (Germany, Spain, Italy) are at or near all-time highs. This has left many investors nervous and fearful of investing cash into the market, but should you be concerned?
Firstly, we should be aware that this is normal, new highs are not rare. Markets actually trade at all-time highs more often than you might imagine. Based on data since 1970, the US has closed at all-time highs in 217 out of 654 months, roughly a third of the time. The UK is a bit lower, but with 171 months at a new high that is still over a quarter of the time. While waiting for a dip may seem prudent, investors who sit out risk missing gains. New highs in the market often become tomorrow’s baseline.
Secondly, on average markets tend to keep rising after reaching new highs. In fact, returns following an all-time high are consistent with (and sometimes better than) long-term average returns. While this may seem counterintuitive, remember new highs don’t just happen randomly, they’re typically driven by a number of positive factors such as strong earnings growth, improving economic trends, investor optimism, and momentum tends to persist. Bull markets are often made up of many new highs along the way and selling out at the first sign of strength can mean missing out on future gains.
To give this some colour let’s look at actual market returns over time. We’ve used US equities, as it is the largest global equity market, and specifically looked at returns for its main index, the S&P 500, which comprises the 500 largest listed US companies. For our analysis, we’ve used the longest period that we have data for, starting at 1 January 1970. We’ve calculated average returns over 3 different timeframes both for periods starting at an all-time high and for all periods. On average, 12-month returns following an all-time high have been better than at other times, returning 12.9% versus 12.3% and have been similar over longer timeframes.
For the US, subsequent returns are similar (if not better) when investing following an all-time high.
Average return for US equities (S&P 500) over different timeframes, per annum
Source: Artorius, Bloomberg
Performance is for S&P 500 (total return in USD) using monthly returns from 1 January 1970 to 30 June 2025. 2 year and 5 year returns have been annualised.
Whenever we find a result that seems slightly unusual it is useful to check it against other data, or in this case other markets. In this case, we did the same analysis for the UK market (using the FTSE All-Share) and in this case the result is more expected – a drop off in performance when investing at an all-time high. Albeit the returns remain strong. On average, 12-month returns have been 8.7% versus 10.1% for all periods with a similar outcome over longer timeframes.
For the UK, returns following market highs have been weaker than in other periods but still strong.
Average return for UK equities (S&P 500) over different timeframes, per annum
Source: Artorius, Bloomberg
Performance is for FTSE All-Share (total return in GBP) using monthly returns from 1 January 1970 to 30 June 2025. 2 year and 5 year returns have been annualised.
So for the UK at least, there may be the possibility that we could benefit from “timing” the market which, while enticing, is a strategy fraught with risk and rarely successful in the long run.
Trying to time the market rarely works — and missing just a few of the market’s best days can significantly impact long-term returns. And those best days tend to cluster around periods of market stress and recovery, often close to all-time highs, when being invested can be uncomfortable. Just looking at those best days we can see the depths of the financial crisis in 2008/2009, the Covid pandemic in 2020 and most recently the Trump tariff volatility of this year.
The 10 days with the highest daily performance during the period (1 Jan 2020 – 30 Jun 2025)
| No. | Date | Daily Return | Cumulative Return (Previous 5 Days) |
|---|---|---|---|
| 1 | 28 Oct 2008 | 7.5% | -7.9% |
| 2 | 13 Oct 2008 | 7.4% | -16.4% |
| 3 | 24 Mar 2020 | 7.2% | -0.3% |
| 4 | 9 Apr 2025 | 6.5% | -9.7% |
| 5 | 10 Mar 2009 | 5.7% | -2.0% |
| 6 | 13 Nov 2008 | 5.5% | -5.7% |
| 7 | 17 Mar 2020 | 5.4% | -8.4% |
| 8 | 6 Apr 2020 | 5.2% | -1.1% |
| 9 | 20 Oct 2008 | 5.2% | 2.5% |
| 10 | 19 Sep 2008 | 5.2% | -7.5% |
Source: Artorius, Bloomberg
Time in, not timing the market is key
An investor who remained fully invested in global equities for the entire period between 1 January 2000 and 30 June 2025 would have achieved a cumulative total return of 508%, which corresponds to a 7.6% annualised return.
However, an investor who missed just the 10 best days of returns over the entire period would have achieved a cumulative total return of only 259%, which corresponds to a 5.4% annualised return.
Missing a handful of the best days in the market could have a significant impact on portfolio performance
Source: Artorius, Bloomberg
Data as at 30 June 2025. Returns include the reinvestment of dividends. An investor cannot invest directly in an index, they are shown for illustrative purposes only. Actual performance would be reduced by any platform, product or management fees.
To conclude, let me give the same advice that we gave amidst the volatility in April.
Don’t try to time the markets. It’s nearly impossible. Time in the market is what matters. While staying the course and continuing to invest even when markets dip may be hard on your nerves, it can be healthier for your portfolio and can result in greater accumulated wealth over time.
Maintain a diversified portfolio based on your tolerance for risk. It’s important to know your comfort level with temporary losses. Sometimes a market drop serves as a wake-up call that you’re not as comfortable with losses as you thought you were.
And I’d add:
Stick to Your Plan. If your portfolio is designed around your goals and risk tolerance, don’t let headlines sway you.
Rebalance If Needed – Highs (and lows) will move your portfolio away from your target allocation and systematically rebalancing controls risk and should enhance performance over time. Within our discretionary portfolios we continually review portfolios, rebalancing when needed, but it is good practice to review your overall position regularly.
Gareth Thomas
Head of Investment Management
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Important Information
All expressions of opinion reflect the judgment of Artorius at 25th July 2025 and are subject to change, without notice. Information has been obtained from sources considered reliable, but we do not guarantee that the foregoing report is accurate or complete; we do not accept any liability for any errors or omissions, nor for any actions taken based on its content. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. Past performance is not a reliable indicator of future results. Nothing in this document is intended to be, or should be construed as, regulated advice. Artorius provides this document in good faith and for information purposes only. Reliance should not be placed on the information contained within this document when taking individual investments or strategic decisions.
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