Investing at All-Time Highs: Is It Risky or Rewarding?
The stock market is near its record high, causing mixed emotions among investors. While some are enjoying the rewards of strong performance, others are hesitant to jump in at these levels. But according to UBS analysts, investing at all-time highs may not be as risky as you think.
Historical data shows that 28% of the time, investors wouldn't have lost money in the S&P 500, including dividends. And surprisingly, the risk of drawdowns is actually lower when investing at an all-time high. UBS notes that 32% of investments made at record highs would not have seen a loss at any future point.
Balanced portfolios, combining stocks and bonds, are recommended to minimize losses. A portfolio with 60% stocks and 40% bonds typically avoids significant losses. UBS suggests a systematic investment approach over trying to time the market, and advises reallocating cash into high-quality corporate bonds to prepare for potential interest rate declines.
With expectations for Federal Reserve rate cuts and stabilization in China through policy measures, the current economic context favors both equities and bonds. By following UBS's recommendations and staying informed, investors can navigate the market confidently and potentially achieve rewarding returns.
