Are the markets too high?

Feb 2021
Guest authored by Kujah

The stock market is reaching all-time highs and it makes you question whether to start investing now. Will it go down? Should I wait? Nothing wrong with these questions, especially if you're quite new to investing. But you can't shake the feeling that you've missed out on the chance to get in as cheaply as back in March 2020.

If you buy in now, you're pretty m

uch going to be buying in at the all time high...

Should You Wait For The Next Market Crash?

If this sounds like your dilemma, our guest writer Kujah from Financial Independence Scribbles has done an analysis in his article.

The key points from the article can be summarized as below:

What does history say?

Considering the markets are currently at an all time high, any price in history is considered cheap. This means all previous all time highs that seemed “too high” at the time, turned out to be a good investment.

If you had invested at the all time high after every crash since 1929 that was 15% or more, you would have been in profit for the vast majority of cases after 5 years, and in ALL cases after 15 years. Some of these returns were a couple of hundred percent!

Time is the real hero of investing

Even if you missed the new all time high at a particular time in history and needed to buy the market at an even more expensive price, let’s say more than 10% higher, you would have seen similar results in the long run.

Granted that the returns are lower (because you got in higher) the general findings are that you would have done well regardless. The same historical investments would still have been in profit after 5 years, and everything would have been in profit after 15 years.

The longer you let your investments work the more likely you'll see positive results.

Consistency, Discipline and Patience

If you practice Unit Cost Averaging (or Dollar Cost Averaging) then it doesn’t really matter what the price is right at this moment. You’ll be buying all sorts of prices which means the good ones will balance out the bad ones.

And when the markets go up, the bad ones turn into good ones while the good ones simply become even better.

As long as you're consistent, disciplined, and patient you will be fine in the long run.

See our recommended investing beginner tools.

See more about investing.

Kujah's mission is to help people understand their money by making financial scenarios or concepts easy to understand.