To The Moon

The $S&P 500(.SPX)$ has been rising for the past year and a half and is now up more than 55% from its low at the end of 2022.

In addition, in 2024, the index has hit nearly 30 all-time highs, the most recent of which occurred on June 13.

However, the stock market cannot continue to rise, and there will be a correction sooner or later. Once you buy at a historical high and experience a market decline, the investor's portfolio may suffer huge losses.

The reason sounds simple, but at present, when the $S&P 500(.SPX)$ is near its historical high, whether investors should firmly buy or wait for a correction before buying is not a simple question to answer.

Buy or not? Let's find the answer from historical data

• Although buying at high prices seems dangerous, this risk can be mitigated if you can hold firmly for a long time.

• In the short term, the stock market will always fluctuate, which is inevitable.

• In the past 20 years, the market has experienced the worst crashes in history, such as the bursting of the Internet bubble, the financial crisis in 2008, and the COVID-19 pandemic in 2022. However, since 2000, the total return of the $S&P 500(.SPX)$ has reached 263%. Even if you buy at the highest point before the crash or recession, your return rate is still positive now.

The study of historical data also proves this point: as long as you invest for the long term, you will make money at any time by investing in the $S&P 500(.SPX)$ index. Analysts at Crestmont Research studied the rolling 20-year total return rate of the $S&P 500(.SPX)$ since its inception and found that the total return rate of all 105 cycles from 1919 to the end of 2023 was positive.

In short, if you buy an S&P 500 index fund or exchange-traded fund (ETF) at any time in history and hold it for 20 years, you will make money.

Hesitation and waiting are the biggest risks

For U.S. stock investors, buying at the highest point is not the biggest risk, but trying to wait until the market corrects before buying. In theory, timing is of course the best strategy. If you can buy low and sell high, that is of course the best, but in practice, bottom fishing is almost impossible.

For the current U.S. stock market, a correction may be coming, but continued surges are also a high probability event.

Bespoke's research shows that since 1929, the average bull market in the U.S. stock market has lasted more than 1,000 days, and the current bull market has just exceeded 600 days, so the market may continue to rise for many months or even years. If this is the case, waiting now will miss the opportunity to rise. We don't know the trend of the $S&P 500(.SPX)$ in the next few months, but the best investment strategy at present is to continue investing, keep the funds in the market and hold them for a long time, so as to minimize risks and maximize returns.