Should You Invest in the S&P 500 Right Now or Wait? History Offers a Clear Answer.
2026-07-23 09:26
•Justin Pope •The Motley Fool
••• •• Axe Capital view
Timing the S&P 500: Why Waiting Could Cost You
Despite elevated valuations, history shows lump-sum investing in the S&P 500 outperforms waiting for a market dip.
The S&P 500’s current price-to-earnings ratio of 20.4 is notably above its 30-year average of about 17.2. On paper, that suggests caution. Yet, historical data tells a different story. Markets routinely dip during the year—averaging a 14% pullback—but still end positive most years. A Vanguard study found investing lump sums rather than dollar-cost averaging beat the market nearly 70% of the time over the last four decades. South African investors can think about this through the USD/ZAR lens: avoid trying to second-guess global liquidity and timing, as rand volatility will add noise to your returns. For local investors hesitant about US exposure, remember that missing the best days—often clustered around sharp sell-offs—is a bigger risk than buying at a moment that feels expensive. this is just my opinion and not financial advice
I would buy into an S&P 500 ETF like VOO or SPY now rather than wait for a correction, accepting short-term volatility. Keep exposure modest relative to your total portfolio to manage rand-USD swings.
- VOO
- USD/ZAR
- Market valuation remains elevated and could compress
- Rand weakness could reduce returns for local investors
6/10
Despite the S&P 500 trading at 20.4x expected earnings (above its 30-year average of 17.2x), history suggests investors should invest lump sums rather than wait for lower prices. A 2023 Vanguard study found that lump-sum investing outperformed dollar-cost averaging 68% of the time. The market experiences average intra-year drops of 14.2% but still produced positive annual returns in 35 of 46 years (1980-2026). Attempting to time the market often results in missing the best trading days and buying high/selling low.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Justin Pope
Categories: Equities, Earnings, Forex
Tickers: VOO, SPY
Sentiment: Positive - Recommended as a popular index fund for long-term wealth building; cited as a proven vehicle for multi-decade holding periods with positive historical returns. Mentioned alongside Vanguard as a popular index fund option for S&P 500 exposure; implied as suitable for buy-and-hold investors.
Keywords: S&P 500, market timing, lump-sum investing, dollar-cost averaging, valuation, long-term investing, volatility
Insights:
- VOO: Positive: Recommended as a popular index fund for long-term wealth building; cited as a proven vehicle for multi-decade holding periods with positive historical returns.
- SPY: Positive: Mentioned alongside Vanguard as a popular index fund option for S&P 500 exposure; implied as suitable for buy-and-hold investors.