Several times this year, I’ve been asked some version of the same question: “Should I still be buying stocks when the market’s at a record?” My answer hasn’t changed: stay the course, dollar-cost average, and tune out the noise. That being said, here’s the logic behind that reasoning.
Record highs can feel like a sign that a crash must be coming, but history suggests otherwise. Markets tend to spend far more time making new highs than sitting in downturns, and avoiding stocks because they’re “too high” has kept many investors on the sidelines during some of the best periods for returns.
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Bulls vs. bears: Market cycles at a glance
Bull markets last much longer than bear markets, and the difference is substantial. In Canada, the TSX has averaged 89% gains over about three years, while bear markets have typically lasted only around eight months with a 31.5% drop.
Looking at broader global markets, bulls have run for almost six years on average, delivering about 150% returns, while bear markets have dragged on just 11 months with a 31.7% decline.
The numbers show that while downturns can be sharp and painful, they are usually short-lived compared to the long stretches of steady gains. This means the odds are stacked in favour of remaining invested, not heading for the exits when markets feel “expensive.”
Why you can’t time the market
Market timing sounds smart in theory, but in practice, it almost always backfires. Investors chasing tops and bottoms often end up buying high and selling low. This isn’t just an amateur problem. Even experienced professionals, with advanced models and economic forecasts, regularly get it wrong.
Behavioural finance offers a few reasons why. Fear and loss aversion can push investors to sell after a decline, just before a rebound. Herd mentality can lead people to pile in after big gains, right before a pullback. Confirmation bias can make us interpret every bit of news as evidence that we’re right, even when the data says otherwise.
The better move is to accept that perfect timing is impossible, stick to your plan, and let time in the market, not timing the market, drive your results.
A simple, practical strategy: DCA into TSX giants
If the TSX is hitting new highs, the last thing you should do is wait for a pullback that may never come. Instead, keep dollar-cost averaging (DCA) into investments like iShares S&P/TSX 60 ETF (TSX:XIU), which holds Canada’s largest and most established companies.
For a 0.18% management expense ratio, you get instant diversification across sectors like banking, energy, materials, consumer staples, and telecom. This reduces the risk of betting on the wrong stock or sector and keeps you aligned with the market’s biggest drivers.
Over time, a disciplined approach of adding to XIU at regular intervals smooths out volatility and captures the long-term upward trajectory of Canadian equities, regardless of short-term market noise.
