Buying at the peak – why it’s smarter than it feels

New stock market records spark both excitement and doubt. Many investors fear a setback, hold off on new investments, or even sell their shares. Yet, those who do often miss the next upswing. Historically, all-time highs are not a warning sign but rather a reflection of healthy market dynamics. Nevertheless, it can still be sensible to adjust a portfolio in line with prevailing market conditions.

A look at history shows: share prices rise because corporate earnings grow and innovation creates value. This also holds true when markets have just climbed to new record levels. In 2024, for example, the S&P 500 index reached more than 50 new highs. Anyone unsettled by the first record in January missed the subsequent rise of around 25 per cent.

Studies show: all-time highs are not poor entry points
A recent long-term analysis by AllianceBernstein, examining data from 1980 to 2025, confirms this: investors who bought the S&P 500 on the day of a new all-time high achieved, on average, the same twelve-month performance as at any other entry point – roughly 10.5 per cent. Over a three-year horizon, performance following record days was even higher: 36.7 per cent compared with 33.8 per cent. The picture is even clearer for the global equity index MSCI World. On both a one- and three-year basis, investments made after all-time highs performed better. The conclusion is clear: All-time highs are not a threat but an opportunity. They do not indicate overvalued prices, nor do they herald impending corrections. More often, they reflect a stable upward trend – true to the old saying: “The trend is your friend.”

Charts: US and global equities have performed well after reaching new highs

^{Source: Bloomberg, MSCI, S&P, Study by AllianceBernstein (AB) “Up and Away? Tracking Equity Markets After Record Highs” as at 4/9/2025, data from 1980 – July 2025}

Many investors make the mistake of confusing restraint with caution. Those who stop investing after an all-time high, or even exit the market altogether, believe they are seeking safety. In reality, such decisions are rarely rational. The danger lies not in a rising market, but in acting emotionally and without a strategy. Every bull market comes to an end eventually – usually later than expected. What matters is recognising trend reversals in good time.

Tech in boom times, dividends as shock absorbers
Rather than being guided by emotion, a more promising approach is a structured one based on established macroeconomic and market indicators. These help identify genuine shifts in trend. Indicators such as excess liquidity and inflation reveal the current phase of the economic cycle, making it easier to judge when portfolio adjustments are appropriate. The golden rule remains: Time in the market beats timing the market. Instead of exiting completely, investors should reallocate their portfolios according to the economic environment – from procyclical companies that thrive in periods of expansion to defensive, countercyclical names that stabilise the portfolio during weaker phases. These contrasting characteristics are particularly pronounced in technology stocks and high-quality, dividend-paying names.

When conditions are favourable, technology stocks excel thanks to innovation, scalability and strong earnings momentum. However, they are sensitive to changes in interest rates and the economic outlook. They drive performance during upswings but amplify volatility during downturns. High-quality dividend companies, such as Coca-Cola, Procter & Gamble or Walmart, on the other hand, are characterised by stable cash flows, reliable payouts, and resilient business models. In the turbulent market year of 2022, the Nasdaq 100 fell by more than 30 per cent, while the so-called “dividend aristocrats” in the S&P 500 declined by only around 5 per cent – acting as effective shock absorbers within a portfolio.

Model simulations show that a dynamic investment strategy based on these two structurally different styles has historically performed very well. An innovative fund launched this year by the Swiss boutique Fisch Asset Management applies precisely this approach. It invests in a concentrated portfolio of at least 30 individual stocks and flexibly adjusts the allocation between technology and quality-dividend equities. The basis for this lies in the macroeconomic and market-technical indicators mentioned earlier, such as excess liquidity and inflation dynamics. Depending on the market phase, the allocation can vary between 0 and 100 per cent. The aim is to capture opportunities, while managing risk.

Records as opportunity
All-time highs rarely mark the end of a trend. More often, they are simply a milestone on the way to new records. Those who remain invested for the long term and base their decisions on data rather than emotion benefit from the broader upward trajectory. What matters is to stay engaged – not through frantic buying and selling, but through structured portfolio adjustments. The goal is not to pinpoint the perfect moment, but to remain invested, act with discipline, and follow one’s strategy. For patient investors, one principle holds true: Buying at the peak often feels wrong, yet it is usually the right decision when done systematically.