Is the Current Market Peak the Right Time to Buy Stocks? What Data Shows

The S&P 500 has delivered remarkable gains over the past three years, with returns of 26% in 2023, 25% in 2024, and 18% in 2025. As we enter 2026, the index stands near record levels, prompting many investors to ask a critical question: should you buy stocks now? With valuations elevated and concerns about artificial intelligence bubbles and slowing employment growth mounting, it’s natural to feel apprehensive about deploying capital at such heights. Yet historical evidence suggests that this uncertainty might be precisely the wrong time to hesitate.

Why Market Records Don’t Signal the End—They Signal Momentum

Investors often worry that buying when markets reach new peaks means they’re overpaying or timing their entry poorly. But one consistent historical truth challenges this assumption: every record high in the S&P 500’s history was eventually followed by another record high.

This observation might seem obvious, but it reveals something profound about market psychology. A new record peak doesn’t indicate that valuations have spiraled out of control or that a correction must follow. Rather, it suggests the market’s forward outlook remains constructive. After the S&P 500 recovered from the 2022 bear market and hit a record high in early 2024, the index went on to set another 95 closing records through the end of 2025. Investors who became fearful in 2024 because of elevated prices paid a steep opportunity cost—they missed the substantial gains that 2025 delivered.

Research from BlackRock provides additional clarity on this pattern. While the average one-year return following a record high is 7.6% (slightly below the 8.8% average on other days), the three- and five-year returns after a record high actually exceed returns from other entry points. This suggests that short-term price movements matter less than the long-term commitment to staying invested.

Smart Approaches When Stock Prices Reach Elevated Levels

When the broader market sits at record valuations, investors face a strategic choice: search for individual opportunities or embrace broad diversification. The S&P 500’s forward price-to-earnings ratio currently hovers around 22—a level seen rarely throughout history. This elevated valuation landscape makes careful stock selection appealing for those willing to research individual companies.

Yet not every investor has the time or expertise to evaluate individual stocks for value and growth potential. For these investors, purchasing an index fund like the Vanguard S&P 500 ETF offers a straightforward solution. With minimal fees and a proven track record of mirroring the index, such funds capture market-level returns—which historical performance suggests will be solid over extended periods, even when entry occurs at a market peak.

The broader principle holds regardless of approach: accumulating quality companies with strong financial resilience—or maintaining exposure through diversified index funds—has consistently built wealth over decades. Current market prices don’t invalidate this fundamental strategy.

Preparing Mentally for Market Volatility

While history encourages optimism about 2026, prudent investors must prepare mentally for scenarios where markets don’t cooperate. This preparation doesn’t mean abandoning stocks; rather, it means committing to the principle that matters most: extended time in the market consistently outperforms attempts to time individual entry points.

The path to wealth through stock market investing has never been about predicting peaks or valleys. It’s been about maintaining conviction during periods of uncertainty and recognizing that buying opportunities—including those at market highs—have historically rewarded patient capital.

Whether 2026 delivers continued gains or introduces volatility, investors buying stocks today are positioning themselves according to a strategy supported by decades of evidence.