Markets and Economy Client Conversations: Market highs are nothing to fear

When markets hit a peak, some investors grow wary and wait for the proverbial shoe to drop. But upward movement is nothing to fear. Stock market indexes have tended to advance over long periods. If clients believe the world will continue to improve, they should expect markets to trend upward.

As a financial professional, you can help your clients remain on track, with easy talking points from our Client Conversations series. This conversation guide covers the following points you can use to help ease your clients’ concerns about the ebbs and flows of the market:

Market highs have not been uncommon

For S&P 500 Index returns, the stock market has closed at a new high on more than 1,300 days since 1957, or on average once every 13 days. That’s the equivalent of the market being at a new high roughly every two weeks. While other cyclical events occur far less frequently (Halley’s Comet every 76 years, US presidential elections every four years, monthly full moons), market highs can be expected and expected often.

As earnings have improved, stocks have risen

Stocks reflect partial ownership in real companies, with real products and services, and real earnings. Over the short term, those stocks can reflect all kinds of external circumstances, but from 1957 to 2025, there was a 0.97 correlation between the S&P 500 Index and S&P 500 Index earnings. The markets and earnings are nearly synonymous, with stock performances having tended to reflect the performance of their companies over the long term.

Investing on a high has often worked out in investors’ favor

Investing when the market was at a new all-time high has often been a better approach than simply investing on non-market-high days. The subsequent 1-, 3-, and 5-year annualized returns were higher than non-market-high returns. Momentum has tended to be a powerful force in investing.