Ben Felix - The Truth About Investing at All-Time Highs

Short Summary

Main recommendation: Do not avoid investing just because the stock market is at an all-time high, and do not try to time the market based on index levels or valuation ratios; stay invested and stick to your plan. The video argues that index level records are largely meaningless, that returns after all-time highs have historically been broadly positive, and that valuation signals are too noisy to guide real decisions.

Key Points

• All-time highs are common, not rare: about 30% of months for the US market and 23% for Canada from 1970 through May 2026, with the average across 10 countries at 20%, Italy lowest at 9%, and about 31% for the world index.
• Index levels are a poor signal because they are typically price-only, ignore dividends, and are nominal, so they rise with inflation and expected stock returns even without any real news.
• Returns after all-time highs are similar to other months: US returns after highs were higher at the 1-, 3-, and 5-year horizons and similar at 10 years; the 1-year horizon shows a momentum effect.
• High valuations (Shiller CAPE) do correlate with lower average 10-year returns, but outcomes vary so widely that timing markets based on valuation is very hard to do.
• Market timing requires being right twice: getting out at the right time and getting back in at the right time, which the video says is more likely to lead to losses than gains.

Details Worth Noting

• The analysis uses total return indices (dividends reinvested) rather than the price-only indices commonly reported in the media, which the speaker says gives a more accurate picture.
• Across 10 developed markets (1982 to 2024), sorting 10-year returns by starting CAPE showed higher valuations generally meant lower returns on average, though with wide variation in outcomes.
• The speaker notes that the US CAPE was near the level that preceded the dot-com bust at the time of recording, and that US-only samples with CAPE above 40 look grim, while including other countries tells a different story.

Bottom Line

Reaching an all-time high is an expected, not alarming, event for a long-term investor; the real risk comes from abandoning a sound plan through market timing.