I often get questions about whether it’s a good time to invest when the markets are reaching new highs. Look at the illustration of the S&P 500 below  from Dimensional Fund Advisors. On average, when the market closes at a monthly high, it is even higher over 80% of the time in the next one,three,and five years. What is particularly interesting is that the number is almost the same as if the index did not hit a new high. I don't know about you but I can't  see much difference between the two. For the long term investor, there's no reason to try to time the markets.

This interesting slide that I just received from J.P. Morgan was a good reminder of the role that market volatility plays in achieving long term investment goals. The red dot shows the largest decline in any year and the gray bar where the year ended. The average inter year decline since 1980 was 13.8%. The most amazing one to me is 1987 where it was down 34% and ended up 2% for the year. The point is that Markets go through gyrations as a normal course and the only way to have a successful long term investment strategy is to stay invested for the long term and ignore fluctuations.