You might have seen headlines recently about the FTSE 100 hitting an “all-time high”. It’s been a strong year so far, with the UK market delivering double-digit returns – welcome news for investors.
But as markets rise, we often start hearing that familiar phrase: “the market is at its peak” – usually followed by a question like “is now the time to sell?”
It’s a natural reaction – all-time high sounds like something significant. Almost like the top of a mountain, with nowhere else to go but down.
But markets aren’t mountains.
Unlike a mountain climb that ends at the summit, investment markets are designed to keep rising over time. That’s the whole point of long-term investing – to grow your money as economies and companies grow.
So reaching a new high isn’t a warning sign. It’s a normal part of the journey.
To illustrate this, let’s look at what’s happened since the dot-com crash back in 2000. The FTSE 100 didn’t get back to its previous high until 2015. But since then, it’s gone on to reach 84 new highs (the orange vertical lines – some of them are really close together), climbing over 30% in the process.
Source: 7IM/Factset. Past performance is not a guide to future returns.
Even more striking, the US market has hit 315 new highs in the same period, delivering a return of nearly 200%.
Source: 7IM/Factset, Past Performance is not a guide to future returns.
And of course, it’s not just about the UK or the US. One of the key strengths of a well-diversified portfolio is that it doesn’t rely on any single region or sector. By spreading your investments across the globe – including Europe, Asia, emerging markets and beyond – we reduce the impact of short-term shocks in any one area. For example, today’s headlines around potential global tariffs proposed by President Trump have rattled markets and may well lead to a short-term dip. But this sort of movement is part and parcel of investing. Just as a few steps back on a walk don’t undo the entire journey, a down day in the markets doesn’t mean your long-term plan is off track.
The general direction of travel – if you stay invested and keep the faith – is upwards. That’s why we always focus on the long term, and why new highs should be welcomed, not feared.