Should I invest when the stock market is at an all-time high?

Canadian and US stock markets reached new all-time highs in 2026, and if that makes you hesitant — to invest new money, or even to stay fully invested — you're in good company. It feels intuitive that this much good news has to be followed by bad news.

That intuition has a name: the gambler's fallacy — the belief that a streak of positive outcomes makes a negative one more likely. It's the same instinct that tells you a coin is "due" for tails after five heads. And when it comes to markets, the data says the instinct is wrong. This article walks through what an all-time high actually is, what has historically happened after them, and what — if anything — an investor in or near retirement should do about it.

Much of the data below comes from a 2026 analysis by Ben Felix, Chief Investment Officer at PWL Capital, who examined 10 developed stock markets from 1970 through May 2026 using total return indices.

What an "All-Time High" Actually Measures

When the media reports that the S&P 500 or the S&P/TSX Composite hit a record, they're talking about the level of an index — a number that tracks the market value of a weighted basket of stocks over time. The S&P 500 started from a base level of 10 in the early 1940s; today it sits above 7,000.

Here's the part most coverage skips: the commonly reported index level is nearly meaningless on its own, for three reasons.

• It ignores dividends. Reported index levels are price-only, not total return. When a company pays a dividend, its price drops by roughly that amount — you received the money, but the index looks worse. If dividends were included, markets would hit all-time highs even more often than the headlines suggest. Research has found that news coverage of the market is actually more negative when dividends are higher, purely because of this quirk.
• It ignores inflation. Index levels are nominal. Even with zero real growth, inflation alone pushes index levels up over time.
• Stocks are supposed to go up. Equities have positive expected long-term returns. A market that regularly sets new records isn't an anomaly — it's a market doing what it's designed to do. All-time highs should be expected, not treated as news.

All-Time Highs Are Normal, Not Rare

Using total return data (dividends reinvested) across 10 developed markets from 1970 through May 2026:

• On average, 20% of all months were all-time highs across individual countries.
• In the US market, 30% of months were all-time highs. In Canada, 23%.
• A global index hit all-time highs in 31% of months — diversification smooths out the ride, because when some countries are down, others are up.

Nearly one in every three or four months being a record is not the picture most nervous investors have in their head. All-time highs cluster together, too — a record is more often followed by another record than by a crash, consistent with the momentum effect researchers have documented in stock returns.

What Happens After an All-Time High

This is the question that actually matters, and the answer is the opposite of what most people expect.

In the US market, average returns following all-time highs have been higher than returns following all other months at the 1-, 3-, and 5-year horizons. At the 10-year horizon they're similar — slightly lower after all-time highs, likely because record highs often coincide with higher valuations. Canada is a mixed bag at short horizons but looks much the same at 10 years, and other developed markets tell a broadly similar story. For the global index, 1-year returns after all-time highs were considerably higher than after other months.

In every case — short horizon or long, at highs or not — average realized returns after all-time highs remained positive. Sitting in cash waiting for a pullback has historically been the expensive choice, not the safe one.

But What About Valuations?

The level of an index tells you almost nothing. Valuations — what you're paying for a dollar of corporate earnings — tell you a bit more, and this is where the honest caveat lives.

The Shiller cyclically adjusted price-to-earnings ratio (CAPE) is the standard measure here, and in 2026 the US market's CAPE sits near levels last seen before the dot-com bust. Sorting historical 10-year returns by their starting CAPE shows a clear pattern: higher starting valuations have led to lower average future returns.

Before that convinces you to sell everything, two things. First, the relationship is extremely noisy — even from expensive starting points, plenty of 10-year periods still delivered strong returns. The distribution of outcomes is so wide that valuations are of limited use for actually timing anything. Second, the doom-and-gloom case rests heavily on US-only history; when you include other countries, high valuations have been followed by decent returns often enough to make "get out now" a bet, not a plan.

And market timing carries a burden people forget: you have to be right twice. Once when you get out, and again when you get back in. Missing the re-entry — which usually arrives disguised as more bad news — is how timers turn a temporary decline into a permanent loss.

What This Means If You're Retiring on Your Portfolio

For someone with $500,000 to $5 million saved and retirement approaching or underway, "just stay invested" is true but incomplete. An all-time high isn't a reason to change your investments — but it's a good prompt to check your plan:

1. Rebalance to your target mix. Strong equity markets quietly push your stock allocation above where it should be. Rebalancing at a high means trimming winners, not selling in a panic later.
2. Confirm your withdrawal runway. If you're drawing income from the portfolio, make sure the next several years of spending are held in assets that don't depend on the market staying at record levels.
3. Review the tax side of your drawdown. With accounts at high-water marks, the order you draw from — RRSP or RRIF, TFSA, non-registered — and opportunities like pension income splitting matter more, not less. A larger portfolio makes tax-efficient sequencing worth real money.
4. Resist the urge to "do something" with the headlines. The record high is the market working. The plan is what turns it into retirement income.

The common thread: these are planning decisions, made on your timeline, not market predictions made on the market's.

Staying in Your Seat Is a Strategy — When There's a Plan Under It

The evidence is consistent: all-time highs are common, returns after them have been positive on average, and valuation-based timing is far harder in practice than it looks on a chart. The best available strategy is to stick to a plan built for your actual retirement — one that already assumes markets will set records and go through rough stretches along the way.

If markets at record highs have you wondering whether your own mix, withdrawal plan, and tax strategy still fit, Marc Pineault is a retirement planner based in London, Ontario who works with clients across the province. He offers a free initial assessment for people approaching or in retirement who want a clear, calm read on where they stand. To book a no-obligation conversation, visit calmmoney.ca.

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This article is for educational purposes only and does not constitute personalized financial advice. Data referenced is from publicly available research, including analysis by Ben Felix of PWL Capital (1970–May 2026, total return indices). Please consult a qualified professional before making any financial decisions.