“We Should Wait for a Pullback”


Michael W. Crook, CAIA
Chief Investment Officer

Now that the S&P 500 has once again hit an all-time high, we’re going to hear a lot of well-intentioned but uninformed commentators say things like “markets look frothy” or “investors should wait for a pullback before they put money to work.” The reality: all-time highs have been great times to invest.

Since January of 1988, investments in the S&P 500 at all-time highs have done better on average, not worse, than investments made on any other day over 1-, 3-, and 5-year horizons (Fig. 1).

Fig. 1: S&P 500 Total Returns

Source: Bloomberg, Mill Creek. Data reflects January 4, 1988- January 23, 2024.
What would happen if you had only invested after a 10% or greater pullback? Average performance was even worse (Fig. 2)!

Fig. 2: S&P 500 Total Returns

Source: Bloomberg, Mill Creek. Data reflects January 4, 1988- January 23, 2024.

It’s worth noting that this analysis understates how poorly a “wait for a pullback” approach usually works because it doesn’t include the opportunity cost of waiting. Since 1988 the S&P has traded at an all-time high 10% of the time, within 5% of the all-time high 57% of the time, and within 10% of the all-time high over 70% of the time.

Disclosures & Important Information

Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that

MCCA believes to be reliable, but MCCA does not represent or warrant that it is accurate or complete. The views in this publication are those of MCCA and are subject to change, and MCCA has no obligation to update its opinions or the information in this publication. While MCCA has obtained information believed to be reliable, MCCA, nor any of their respective officers, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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