Whether stocks are high or low there is always something to fear.
If stocks are low, we think it will get worse. When they are high, we are convinced it might fall.
Two common fears about the stock market are high stock prices and the decline of the dollar.
But what does the data show?
Stocks made a ferocious comeback this year to all-time highs (ATHs). What may surprise you even more than the speed of the recovery is that the odds of investing at ATHs is better than investing when stocks are not at ATHs.
JPMorgan shows that not only does the S&P 500 close at ATHs almost 7% of the time, but that nearly 30% of the time ATHs set a market floor. What do they mean by market floor? It is “an all-time high from which the market has never fallen more than 5%.”1
While ATHs do not guarantee further highs, this is not an argument against further highs either. Mark that.
After all, the US stock market has continued to set new records throughout our nation’s history.
What about the decline of the dollar?
In a recent note, DataTrek Research revealed that over the last 15 years, moves in the dollar do not have much of a role to play in explaining S&P 500 returns. In fact, “a weaker dollar is good” for US stocks, though they show that it has been even better for stocks outside the US.2
Fisher Investments research team goes back even farther to the 1970s and shows that there is not much correlation between stocks and the dollar at all. It’s simply not predictive.3
One may counter that both reference points are much too short of a time frame. They do not encompass an average lifetime of an investor. True. But the dollar has been relatively flat or in declining trendline for a long time and stocks have been a great place to put those dollars. Here is two CENTURIES—yes, that two hundred years—worth of data4:
Does this mean that investing at ATHs or during a declining dollar will always work in the future? Of course not.
It does mean that history has shown that these two common fears have not been justified.
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Sources:
1. Chart and data from page 62 of JP Morgan’s Guide to the Markets, (June 30, 2025). Accessed online: https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/
2. DataTrek Morning Briefing on July 8th, 2025.
3. “Does the Dollar’s Decline Spell Doom for US Stocks”, June 4, 2025. Accessed online: https://www.fisherinvestments.com/en-us/insights/personal-wealth-management/market-implications-of-recent-dollar-weakness
4. Chart from “Dividend Growth Investor” via X on December 6, 2024, and attributing Professor Jeremy Siegel’s Stocks for the Long Run. Accessed online: https://x.com/DividendGrowth/status/1865032339891384503