Don't Look Down

In partnership with

New to the Chump Change crew? First off, congrats on being cooler that 99% of investors. Second, don’t forget to get yourself a free copy of my 12 favorite money tools PDF.

6 Reasons Accredited Investors Choose UpMarket for Hedge Funds and Alternative Investments

• No membership fees - it's free to join and explore opportunities

• Curated investment options - thoroughly vetted by our expert team

• Lower investment minimums - access institutional-quality funds with smaller checks

• Diversification potential - add uncorrelated assets to your portfolio

• Seamless online process - invest and manage your account digitally

• Robust reporting - stay informed with regular updates and valuations

UpMarket has helped deploy over $150 million into alternative investments. Are you ready to unlock the private markets and invest in hedge funds and other alternatives?

Sign Up for Free Access

Quote

"All-time highs are simply proof that markets trend up over time." — Morgan Housel

Don’t Look Down

As you open your brokerage account to invest you notice the chart is at the highest point it has been in years. “It has to go down soon” you tell yourself. Then, hesitation…

“Should I keep investing at all time highs, or wait for a dip?”

You’re not alone. This is a common fear among investors.

So in this post we are going to look at:

• The psychology of buying at ATHs.

• What the data says you should do.

Let’s get into it👇️

Psychology of Being At The Top

All time highs actually works in two ways depending on the person.

Person A - Is worried that the only way is down. Obviously the market can’t go up forever and eventually a pullback is going to happen. They don’t want to overpay (this is me calling for mommy).

Person B - Sees the market going up and figures more people will want to get in on the action. Higher prices = more buyers = higher prices. After all, FOMO is real (these people live on the edge).

It’s important to see both sides of the “all time high mentality” to keep you sane. To your brother it might mean the market is going down soon while your neighbor thinks it’s going to cause another rip higher.

Psychology is a weird thing…so let’s look at the data.

What The Numbers Say

We’ll set the stage with this fun fact. The S&P 500 has been within 5% of an all-time high nearly half the time since 1950 (source).

Yes, it doesn’t take a genius to see where this is going.

In a study done by RGM Asset Managers they compared returns if you had only invested at S&P 500 all-time highs from 1950-2023. Here is what they found:

Even if you ONLY bought at the peaks, your one, three, and five year average return would have been extremely similar compared to if you bought on all other days.

Another takeaway from this study is that just one year from each all-time high, only 9% of the time was the market down more than 10%. Go out ten years and the S&P was never down more than 10% since 1950 following an all time high.

If you still aren’t convinced, here is another post from The Best Interest Blog with additional data to back up buying at the market top.

Conclusion

While it is inevitable that the market will have pullbacks, the best protection is dollar cost averaging over time.

If you are a long term investor, you should not be afraid of buying at the top. After all, all time highs are a good thing and someone has to lead us higher.

Might as well be you. ~ Cade

Chump Change Picks

Why Leverage ETFs Suck - There is a lot of hype and bad information on leveraged ETFs. On the surface they seem like a great place for higher returns. This is a good video on why they should be avoided by most (if not all) investors.

How Much House Is To Much? - Being we are in the early stages of potentially buying at home I found this post by one of my favorite finance write Nick Maggiulli. Sharing for the other homeowners (and future homeowners) who might be reading.

Best Memes

Truth hurts….

Dare we say…soft landing achieved?

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.