When the market hits a new high — it’s normal to wince

By Kevin Wood, CFP™ - November 2025

Seeing the market at an all-time high can feel like a flashing sign: “Danger → bubble about to burst.” Even though higher prices are what investing is meant to deliver, those highs can trigger doubt (and sometimes prompt the impulse to go to cash)—which is exactly why we’re talking about this now.

1. Record highs are part of the journey, not a warning sign

It may surprise some investors to learn that new highs in the market are far from rare. According to Dimensional Fund Advisors, the U.S. market has ended the week on a new high in slightly more than one out of every six weeks since 1926.

Their data also shows that average returns after a new high are not significantly different from average returns at other times: for example, over periods of one, three and five years following a high, the returns have been broadly in line with long-term averages.

In simple terms: a new high isn’t a red flag telling you to pull back. It’s a natural sign of the market doing its job.

2. Why the discomfort kicks in

Why do we all feel a bit uneasy when markets soar? A few reasons:

High prices invite attention and headlines. Headlines trigger fear. Fear nudges us toward “safe” options = cash.
The instinct to “get out ahead of a fall” is deeply human. But research says timing the market is extremely hard.
The higher things go, the louder our inner voice: “Is this the top?” That question creates friction against staying invested.

3. But today’s fundamentals give reason for discipline

Even though valuations are elevated in many sectors, there are reasons to think the market still has firm ground:

Recent earnings: For the S&P 500 companies, blended year-over-year earnings growth for Q3 2025 is around 9.2%.
According to Goldman Sachs, while global equities do show some signs of stretched valuations (and concentration in tech/AI), they are “not yet at levels consistent with historical bubbles.”
For investors, this means: yes, valuations are elevated but they are arguably supported by earnings momentum and structural shifts (for example in technology) rather than pure irrational speculation.

4. The behavioural traps to watch

When markets feel “high”, certain traps become more tempting:

Moving to cash because of fear ⇒ missing the upside while out of the market. Research shows that being out even a few of the best days can severely impact long-term returns.
Chasing the latest “theme” because it’s on a run (for example, tech/AI) and paying too much.
Overreacting to a correction by moving from stocks to bonds/cash without accounting for the long-term goal.
These traps all stem from emotion (fear, greed, uncertainty) rather than discipline.

5. Practical ways to stay disciplined (and invested) when it feels uneasy

Here are some real-world guardrails:

Focus on your time horizon. If you’re investing for 5–10 years+, day-to-day and year-to-year highs/lows matter much less. The longer your horizon, the greater the probability of positive returns.
Revisit your plan and risk tolerance. If you created your portfolio when markets were lower, a high market doesn’t automatically change your objective.
Stay invested. Use £-cost averaging or regular contributions rather than trying to “wait for the dip”. High markets may feel scary—but staying in position matters.
Accept volatility. Moments of discomfort are part of investing. If you panic out of the market you might pay a high emotional and financial price.

6. So what should the investor feel right now?

If you’re feeling optimistic: great. The market is doing its job and the earnings show things are moving. If you’re uneasy: also okay. That discomfort is natural and often signals you’re paying attention. But don’t let it drive you to pull cash out and miss what comes next.

At a record high, you have two main choices: act impulsively (cash out) or act intentionally (stick to your plan). The evidence strongly supports the latter.