This Market Is More Normal Than You Think

If you’ve felt uncomfortable investing lately, you’re not alone.

The S&P 500 is near all-time highs while headlines are dominated by geopolitical tension, inflation concerns, and uncertainty around interest rates. That combination feels contradictory, and many investors instinctively interpret it as a warning sign.

But historically, markets spending time at all-time highs is not unusual. It is, in many ways, the baseline condition of a growing economy.

Markets Hit Highs More Often Than You Think

Since 1950, the S&P 500 has delivered approximately 10–11% annualized returns ¹. Because of that long-term upward trend, new highs are not rare events, they are a recurring feature of normal market behavior.

• From 1950 through 2024, the S&P 500 has hit over 1,200 all-time highs²
• That averages to roughly 16–17 new highs per year over long periods
• During strong bull markets, those highs tend to cluster. For example:
  • 1995 alone saw 77 new all-time highs³
  • 2017 saw 62 new all-time highs⁴
  • 2021 saw over 70 new all-time highs⁵

These are not anomalies. They are periods when earnings growth, liquidity, and investor confidence align.

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A market making new highs is not unusual, it is what a functioning, growing market is supposed to do.

Why All-Time Highs Don’t Equal a Bubble

A common mistake is assuming that high prices automatically mean irrational behavior.

Historically, bubbles are not defined by markets reaching new highs. They are defined by extreme disconnection between price and underlying fundamentals.

Example: The Dot-Com Bubble (Late 1990s)

• The Nasdaq peaked in March 2000 after rising over 400% in five years⁶
• Many companies had no earnings, and in some cases no revenue
• The S&P 500 traded at a forward P/E above 25x, while the Nasdaq traded even higher⁷
• Capital was flowing into speculative businesses with unproven models

When the bubble burst:

• The Nasdaq fell nearly 80% from peak to trough⁶
• Hundreds of companies went to zero

The collapse was not caused by high prices alone, it was caused by fragile underlying structure.

Why Today Looks Different (So Far)

Today’s market certainly has pockets of elevated valuation, particularly in AI-related stocks. but there are important differences:

• The largest companies driving the market (like Microsoft, NVIDIA, and Alphabet) are generating tens of billions in cash flow
• Corporate earnings overall are strong, with roughly 84% of S&P 500 companies beating earnings expectations this quarter⁸
• AI spending is not theoretical, it is translating into real revenue.

That does not mean the market is cheap. It means the current environment is being supported by actual earnings power, not just speculation.

Historical Perspective We Miss

Some of the strongest long-term returns in markets have come from investing during periods that felt uncomfortable at the time.

For example:

• Investors who stayed invested through the 1990s bull market participated in one of the strongest decades in history
• Investors who avoided markets after the 2008 financial crisis missed a more than 4x increase in the S&P 500 over the following decade⁹
• Even after major crises, markets have consistently gone on to reach new highs as earnings and economies recover

The Bottom Line

This market feels uncomfortable, but discomfort alone is not evidence of irrationality.

Historically, markets:

• spend significant time at or near highs
• reward long-term participation despite short-term uncertainty
• and move ahead of clarity, not after it

The reality is that “normal” markets often feel wrong in real time.

Waiting for market to feel comfortable can cost you.

Take The First Step:

If you are looking for a trusted partner on your investment journey, we encourage you to reach out. You can apply to be a client at this link.

Sources

¹ S&P 500 historical returns – NYU Stern (Damodaran)​
² Deutsche Bank / Bloomberg data on S&P 500 all-time highs
³ 1995 market data – S&P Dow Jones Indices
⁴ 2017 record highs – CNBC market analysis
⁵ 2021 record highs – Reuters market recap
⁶ Nasdaq dot-com crash data – Federal Reserve / historical charts​
⁷ S&P 500 valuation history – Multpl​
⁸ FactSet Earnings Insight
⁹ S&P 500 total return post-2008 – S&P Global / Morningstar data