While the market is trading near all-time highs, that is no reason to delay starting to invest. In fact, waiting for a pullback can be one of the biggest traps that investors can fall into.
The reason is twofold. First, the S&P 500 actually hits new highs much more often than most people realize. According to JPMorgan, stocks hit new highs on about 7% of all trading days. On roughly a third of those occasions, the index never trades lower. Meanwhile, bull markets tend to last a long time, with the average bull market lasting five-and-a-half years over the past 50 years.
We recently crossed the three-year mark on the current bull market, so there could be more room to run. Meanwhile, the Carson Group found that every bull market in the past 50 years that has lasted three years has reached the four-year milestone as well. Its analysts also noted that when the market has made big rallies over a six-month period (up more than 35%), the market has also traded higher over the next 12 months, dating back to 1950.
Image source: Getty Images.
The other reason not to wait for a pullback is that investors then have to correctly time the market a second time and start investing before the market turns. If you miss out, you're going to miss out on a lot of gains. Bull markets tend to perform best right after the turn, with an average gain of more than 13% in the first month and over 25% within the first three months.
Many of these gains come on days of big market rallies that follow big declines. If you freeze and miss out on these big market rally days, your returns will suffer. JPMorgan found that if investors missed out on the 10 best days during a 20-year period, their return would be cut nearly in half.
That is why I think that dollar-cost averaging is the best solution. This is simply investing a set amount regularly, like once a month, regardless of whether we are in a bull or bear market. This will remove market timing and help you build wealth over time. You can start with a small amount, say $100, and consistently invest in a top exchange-traded fund (ETF).
The Invesco QQQ Trust
One of my favorite ETFs to invest in right now is the Invesco QQQ Trust (QQQ 0.83%). The ETF mirrors the performance of the Nasdaq-100 index, which is largely made up of growth stocks and artificial intelligence (AI) leaders. Its top 10 holdings, which make up roughly half of its portfolio, are comprised of the top companies leading the AI charge.
NASDAQ: QQQ
Key Data Points
AI looks like it will be a huge technological shift, and right now, we are still in the very early innings. Unlike the dot.com boom and bust, the companies leading the charge this time are some of the largest tech companies in the world, with strong balance sheets that throw off huge free cash flow. This allows them to aggressively pursue the AI opportunity while remaining financially healthy.
Based on 2026 analyst earnings estimates, many of these stocks are trading at reasonable valuations given their growth, with forward price-to-earnings (P/E) ratios generally below 30 times. That's a far cry from dot.com bubble levels.
The Invesco QQQ, meanwhile, has a strong track record that is hard to match. Over the past decade, it's produced an average annual return of 19.3%, and over the last three years, it's generated a yearly return of 29.1%. Even more impressive is that it's outperformed the S&P 500 on a rolling-12-month basis nearly 88% of the time over the last 10 years.
If you have $100 and are looking to invest, this is a great place to start. A $100 investment will buy a partial share, so find a broker that supports fractional share trading.
