As the S&P 500 continues to reach record highs, investors may need to focus less on timing the market and more on managing emotional reactions.
The current S&P 500 bull market has been remarkably resilient. Since finding its footing on 12 October 2022, at a closing low of 3 577, the index has climbed for over three and a half years, now hovering around the 7 400 mark. Even amidst global uncertainty, the S&P 500 has notched 16 record highs in 2026 alone.
For many, these milestones bring as much anxiety as they do celebration. When markets trade at historical premiums and headlines scream ‘record highs’, the human psyche naturally begins to expect the worst. However, successful investing is less about predicting the next drawdown and more about managing your reaction to it.
Reframing The ‘Record High’
It is helpful to remember that equity markets spend a surprising amount of time at or near all-time highs. This isn’t a sign of an impending crash, but rather a reflection of a growing global economy.
Economies expand, corporate earnings compound, and productivity improves. Over the long term, new highs are the natural byproduct of compounding assets.
Investors who wait for the ‘perfect entry point’ often find themselves sidelined while the market continues to climb. While starting valuations do influence medium-term returns, particularly in high-growth areas like AI-linked tech, lower expected returns over the next decade do not automatically imply a poor outcome compared to cash.
Identifying The Real Risks
Anxiety often stems from focusing on the risk of investing, while ignoring the risk of not investing. For most, the true long-term threats are inflation erosion, insufficient growth, and failing to compound early enough.
In a South African context, these risks are magnified by currency depreciation and domestic economic concentration. This makes exposure to offshore growth assets not just an opportunity, but a strategic necessity for preserving purchasing power.
Behavioural Tools: Time In The Market
The old adage remains true: it is time in the market, not timing the market, that builds wealth. If record highs make you hesitant to deploy capital, consider ‘phased investing’. By spreading a contribution over six to 12 months, you mitigate the psychological sting of a potential immediate drawdown.
While lump-sum investing historically outperforms phased entry because markets trend upward, phased investing is a powerful behavioural tool. It moves you from a state of “wait and see” to a state of active participation.
Building For Resilience
A portfolio is only optimal if you can stay invested through a 20% drawdown or a geopolitical shock. Practical portfolio design is the best antidote to anxiety:
- Global diversification: Spreading risk across geographies and sectors.
- Quality bias: Focusing on companies with robust balance sheets.
- Defensive allocations: Maintaining liquidity to avoid being a forced seller.
Sometimes, a slightly more conservative portfolio that you can hold for twenty years is vastly superior to an aggressive one that you abandon during the first bear market.
Perspective In A Secular Context
While a three-and-a-half-year run feels extended, history suggests this ‘secular’ bull market is still relatively young. Post-WWII bull markets have averaged about five years, with some, like the 1990s run, lasting nearly a decade.
The current rally, which began as inflation peaked and broadened from the ‘Magnificent Seven’ into mid-caps and value sectors, is part of a long history of resilience.
Markets have survived the Cold War, the dot-com bubble, and global pandemics. Uncertainty is not an exception to the rule; it is a permanent feature of the landscape.
Control The Controllables
Ultimately, we cannot control the timing of the next market correction, but we can control our preparedness. Managing investment anxiety requires a shift in focus from the daily fluctuations of the index to the structural integrity of your financial plan.
By aligning your portfolio with your personal tolerance for volatility and maintaining a global perspective, you transform market highs from a source of fear into a milestone of progress. Wealth is not built by avoiding the storms, but by ensuring your ship is sturdy enough to sail through them.
