New York City, NY – The recent surge in the stock market, marked by its 24th record high this year, has reignited concerns among investors about purchasing stocks at peak levels. But is buying stocks at record highs actually a smart long-term strategy? In a market where stocks have frequently reached new highs, the common misconception that buying at these levels leads to lower returns may not hold true.

Historically, buying stocks at record highs has not resulted in lower returns; in fact, statistically, higher returns are more likely in the short term. With stocks hitting record highs 33% of the time since World War II and typically yielding about 10% annual growth, buying at peak levels could actually align with historical returns. Additionally, momentum, solid economies, and strong earnings growth often underpin bull markets, challenging the notion of stocks being in a bubble.

Valuations do play a significant role in investment decisions, with metrics like enterprise value-to-cash flow offering insights into a company’s true value. By considering “cash-adjusted” valuations like EV/cash flow, investors can gain a more accurate understanding of a stock’s worth. These metrics, favored by institutional investors and professionals, provide a clearer picture of a company’s valuation.

Cash-adjusted valuations matter because they account for a company’s cash