The psychological barrier of buying equities when indices are near record levels often leads investors to sit on the sidelines, missing out on potential gains.
A new analysis examining 15 years of data from Brazil’s Ibovespa, the IDIV dividend index, and the US S&P 500 suggests that this hesitation is historically counterproductive.
The study indicates that entering the market during periods of strength has consistently yielded positive long-term returns, reinforcing the adage that time in the market matters more than timing the market.
The research highlights that the perception of prices being "too high" is a common behavioral trap.
By analyzing entry points at historical peaks, the data demonstrates that subsequent corrections are often short-lived relative to the long-term upward trajectory of major equity indices.
For investors, this implies that waiting for a dip may result in lower overall portfolio growth compared to maintaining consistent exposure during bull markets.