Why there’s no reason to fear buying stocks at record highs

Published: Nov 8, 2019 9:55 a.m. ET

Share
Print icon
Getty Images
Keep calm — there’s nothing to fear about buying stocks at records, historical data show.
Author photo

By

European markets editor

Heights can be dizzying.

But there’s no reason to fear buying stocks at records.

In a blog post, Meb Faber, co-founder and chief investment officer of Cambria Investment Management, found that buying stocks at all-time peaks — and otherwise being in government bonds — returned more than just holding stocks.

Buy at highs? Why not?

Faber did point out that he wasn’t suggesting buying at highs as a strategy, but merely pointing out that it’s no reason not to purchase equities.

Standard & Poor’s performed a similar analysis. Historically, the S&P 500 SPX, -0.20%   has tended to keep going up after reaching new highs, posting an average gain of 12.34% in the 12 months following a new record close.

The Dow Jones Industrial Average DJIA, +0.04%   on Thursday finished at a record for the seventh time in 2019. The S&P 500 notched its 18th record of the year, and the Nasdaq Composite COMP, -0.13%  reached the second-highest level in its history.

Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

We Want to Hear from You

Join the conversation