Why I Keep Dollar Cost Averaging at All-Time Highs

The Question That Keeps Coming Back

In early April, when the S&P 500 crossed 7,000 for its all-time high, I got the same question from multiple people: "Are you really still dollar cost averaging at the literal all-time high?"

Yes. Without hesitation.

TL;DR The S&P 500 sets new all-time highs over 10 times per year on average in good years. Waiting for a "better price" historically means buying at an even higher price later. Dollar cost averaging works because it removes the emotional impulse to time the market — and that impulse is almost always wrong.

A month later, the S&P 500 is above 7,200. Anyone who waited for a pullback is now facing prices 200 points higher than the "too expensive" level they balked at.

Why Dollar Cost Averaging Works

The S&P 500 hits a new all-time high more than 10 times per year on average during good years.

Once you internalize this fact, the intuition that "all-time high = expensive" starts to collapse. All-time highs aren't anomalies — they're the normal state of a rising market. If your rule is "don't buy at all-time highs," you're systematically sitting out most of the market's best stretches.

The mechanics are straightforward:

• No need to predict market direction
• Eliminates emotional decision-making
• Captures the long-term average cost basis

I invest with my head, not my heart. My gut tells me "it's too high, wait for a dip." The data tells me that waiting usually means buying higher. The data wins every time.

Applying This in Today's Market

The current market presents a genuinely complex backdrop for investors. The S&P 500 is at all-time highs, but significant risks are running in the background:

• The Fed held rates at 3.5–3.75% with virtually no chance of cuts this year
• The Iran situation has pushed gas above $6/gallon in California and diesel past $8
• The ceasefire is temporary — when it ends, volatility could return sharply

This is exactly the environment where dollar cost averaging proves its value. You don't know whether the market goes up or down from here. Nobody does. The strategy works precisely because it doesn't require that knowledge.

What I'm Buying

My focus is on broad-based index ETFs — the three-fund portfolio approach covering US total market, international markets, and bonds. This has been my core strategy regardless of market conditions, and nothing about the current environment changes that.

Individual stocks are a different story. Volatility within the MAG7 alone is extreme — companies are being rewarded or punished based purely on their AI capex levels and perceived monetization path. If prices drop far enough, Microsoft and Amazon are the two I'd consider adding. I'm also researching energy companies and quantum computing stocks.

But the key point: individual positions are satellites, not the core. The core is broad, diversified, and automatic.

Acknowledging the Risks Without Letting Them Paralyze You

I'm cautiously optimistic right now. Earnings were strong across the board. GDP rebounded. AI investment is generating real returns, not just hype. These are legitimate positives.

But thinking "we're past the worst" is premature. The Middle East situation is paused, not resolved. Oil prices at current levels are already a drag on the economy. There's likely more turbulence between now and 2027.

The worst responses to uncertainty are the extremes — going all-in out of FOMO or selling everything out of fear. The right response is sticking to your system. If that system is dollar cost averaging, then you buy this month just like you bought last month and just like you'll buy next month. The price on the screen is irrelevant to the process.