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Feel free to reach out to PSG Wealth Manager  Patrick Duggan  directly.

(Over its 65-year journey, the ALSI has delivered annualised returns of over 11%, reflecting the resilience and growth of South Africa’s capital markets. 2025 has positioned the JSE among the best performing markets in the world in Dollar and Rand terms).

Several markets have hit new all-time highs recently. Despite multiple wars, tariffs, inflation concerns, Trump Tantrums, and dozens of other things to worry about, markets just keep chugging along.

The question often asked at market highs is Should You Buy An All-Time High?

Nobody wants to deploy their capital right before a crash and then wait years before seeing a return on their investment. We all want the best price possible, and buying near an all-time high does not feel like we are getting the best price.

This intuition is correct. There is only a 5% chance that you are going to buy an asset at its best possible price. This means that there is a 95% chance you will buy too high relative to some lower future price. Does this imply that you should not buy near all-time highs? Not at all.

In fact, the data suggests that for many risky assets all-time highs are a bullish indicator, at least in the near term. Why? Because all-time highs tend to follow other all-time highs. Of course, this process will not last forever, but it can go on longer than you think. This is why there is nothing wrong with striking while the iron is hot.

Why All-Time Highs Are Usually Bullish

When you think of all-time highs it is easy to think of them in terms of fear. All-time highs represent uncharted territory and the unknown, right? But what you should really think about when you hear “all-time highs” is more buying. Period. This is how markets work. When more Rands/Dollars/Pounds/Euros/etc. are trying to get into an asset than are trying to get out, prices rise. And if this behaviour continues, prices will continue to rise. This is why all-time highs tend to follow all-time highs. Higher prices attract more buyers which attracts higher prices, etc.

The below piece from Peter Hodson of 5i Research Inc. appeared in the Financial Post recently and it offers 5 reasons new market highs are not necessarily a sign to sell.

Should investors worried about wars, tariffs, inflation, and the Trump factor fear an equity market peak?

Many investors worry about new highs, thinking the end is nigh and this is a reason to sell equities. After all, they say, “Don’t new highs mean we are at a peak?” In our view we should worry less about them, and we should see them as a confirmation of market strength rather than a cause of big new concerns. Sure, one can never get complacent about the market, at any time, but we do not believe that new highs in and of themselves are a reason to sell equities. Let us look at a few reasons for this viewpoint.

1.     Buying at new highs has historically worked out.

Data show that investing at all-time highs has, on average, produced returns equal to or even better than investing at random times. For example, over the past 35 years, buying at new highs has worked out better on average than buying on any other day. One study by U.S. high-net-worth wealth manager Archbridge Family Office found that waiting for a 10 per cent pullback resulted in lower average one-year returns (7.1 per cent) than investing at the high (13.5 per cent). Waiting, of course, means you are not fully always invested, and this can affect long-term returns.

2.     New highs are common.

Using the artificial intelligence service Perplexity as well as Bloomberg LP data, we noted there have been about 1,700 new highs in the stock market since 1968. That equates to about eight per cent of the time, using the number of calendar days since then. The number is even higher, of course, if we only consider stock market trading days. When we look at very long-term investment returns, we certainly would not want to be selling our stocks eight per cent of the time or more just because a new high was reached. New highs are to be expected as a regular occurrence, and we would not specifically target selling because of them.

3.     New highs result in higher investment confidence and FOMO investing.

We all know that U.S. President Donald Trump looks at the stock market as a gauge of the economic health of the U.S. but investors consider these things as well. Considering all the problems in the world right now it is astounding that investors are becoming more confident and looking forward rather than backward. New highs can go a long way in improving investor confidence, and confidence can imply more buying. Right now, there is about US$7 trillion in cash sitting in U.S. money market funds on the sidelines. As interest rates fall (maybe this year), these investors have to be looking at the strong returns in the market and be wondering why they are earning three per cent fully-taxed annual interest when the stock market is already up about five per cent in just the first half of the year. Confidence in the market could see some of this US$7 trillion work its way into the stock market over time, supporting more buying.

4.     There is a correlated positive impact to companies’ cost of capital.

Companies, of course, love it when their stocks hit all-time highs. A nice stock price allows companies to recruit new employees more easily and certainly allows them to retain employees more easily (up to a point; if a stock goes up too much then some employees get so rich they retire). A high stock price allows a company to make acquisitions using its stock as currency. A high stock price allows a lower cost of capital if a company sells shares for new growth initiatives.

5.     Small- and mid-cap companies might finally see some bids.

Small-cap stocks, after a decent rally was snubbed short by Trump’s “Liberation Day” tariff announcement, are still down about one per cent for the year so far, versus a gain of five per cent for the Nasdaq. Small- and mid-cap companies historically do better over the long term, but it is a market sector that needs confidence to really get going. If investors are setting new highs in the large-cap indices, then maybe, just maybe, this confidence will trickle down to the unloved (for now) small-cap sector. As markets rise, the valuation disconnect between large and small-cap stocks may be too big for some investors to ignore.

The Bottom Line

The best defence against significant losses in the stock market is a long enough time horizon.

Obviously, no one is good enough to put all their money in at the bottom or unlucky enough to put all their money in at the top on a consistent basis.

There are crashes, bear markets, and corrections on occasion.

There are periods of time when the stock market goes nowhere.

And there are rip-roaring bull markets.

Shake it up, put it all together, and this is the experience you get when investing in the stock market over longer time frames.

The historic annual returns in the stock market are not simply made up of the good stuff. Those results include some gnarly periods of volatility.

And one of the main reasons we get to experience bull markets like the one we are living through today is because there is always the chance of a crash like we experienced in 2008.

You do not get the good without the bad.

You do not get the gains without the losses.

You do not get the reward without the risk.

Conclusion

Regardless of which risky asset classes you have in your portfolio buying near all-time highs should not be a cause for concern. Of course, you may get unlucky with an asset class during a particular period, however, if you own a diversified portfolio, the impact of such an occurrence should be minimal.

As investors our goal is to grow our wealth so that we can live the life we want. Unless you are investing your entire nest egg into one asset class at a market peak, it is unlikely that buying near an all-time high will ever prevent you from living the life you want. With that in mind, my best suggestion is to just invest and let the chips fall where they may. After all, there is only so much in our control.