What Buying at the Peak Actually Costs

A new bestseller says time in the market always wins. The record on buying at the top says it depends on the price you paid.

The Members Message

Scott Phillips, Chief Investment Officer at The Motley Fool Australia, has a new book out called The One-Page Investing Plan. It runs to 368 pages, which made us smile. On the Equity Mates podcast he made the case that even someone who invested at the peak of 2007 would have done well over time.

Scott is the quintessential buy and hold, dollar cost averaging investor, and plenty of people agree with him. So we checked his claim against the record. Here is what the US CAPE ratio was at the four most famous market peaks of the last century, and where it sits today.

Notice that 2007, Scott's example, was the cheapest of the four. The peak that looks most like today is 2000. So what did buyers at each of those peaks actually earn over the next one, five, ten and twenty years, after inflation? The answer is not a great advertisement for buying at the top, and it gets worse when you add in what fund managers and fees do to your returns…

Also in This Week's Premium Issue

The worst-timing chart: real returns from buying at the 1929, 1973, 2000 and 2007 peaks, and why 2000 is the one that matters now.

The fund manager scorecard: how many Australian managers beat the index over 15 years, and what a 1% fee costs you over 30.

Property's slow bleed: 16 markets side by side, falls from peak, days to sell and how many are selling below asking. One capital city stands out for all the wrong reasons.

Stock Watch: the rare earths miner Canberra says it could nationalise, and what the critical minerals price data actually shows.

World: Ukraine's strikes on Russia's biggest tech company, the widening gap between Washington and Kyiv, and why Norway's army should not have rented those cars.

The Weekly Video Review with Steve, Tom and Jacob.

This Week's Podcast

France's bond scare, the Houthis versus Saudi Arabia, Iran's threat to the undersea internet, the hack that cooked hundreds of French supermarket fridges, Australian property, and Sir John Templeton's rule for how much to hold in stocks when markets get expensive. Free listeners get the full episode.

Listen:Signals & Noise on Spotify, Apple and YouTube →

Show notes:Templeton's Rule for Expensive Markets →

What Kind of Investor Are You?

Knowing the market starts with knowing yourself. Our free investor personality assessment, built on the Enneagram framework, takes ten minutes and shows you your strengths and the blind spots that cost you money.

Free:Take the investor personality test →