But that moment is also uniquely compelling. There’s no overhead resistance, momentum is strong, and every existing shareholder is sitting on a profit (even if just barely, when the breakout is small).

These conditions often lead traders to believe that buying at an all-time high sets the stage for cleaner breakouts and smoother uptrends.

But does the data actually support that belief?

In this article, we dig into the question: Is buying a stock at an all-time high truly more profitable or is it just a tempting narrative?

The Approach

Stock Universe

For this study, we focus on all the stocks that have ever been part of the S&P 500 index, from 1 Jan 1995 to 21 Nov 2025.

We only consider each stock during the period in which it is actually included in the index. For example, in the chart below, GOOGL was added to the S&P 500 after the close on March 31, 2006. The white line marks this change.

Before March 31, 2006, GOOGL frequently made new all-time highs, but none of those triggered a buy signal because the stock was not yet part of the index.

The first valid buy signal occurred only on October 24, 2006 (shown by the white arrow), when GOOGL closed at a new all-time high the previous day (October 23, 2006).

Metrics

When a buy signal is triggered, we measure the stock’s performance over several time horizons: 1 day, 5 days, 10 days, and 20 days after entry.

If a stock closes at an all-time high on Day 0, the entry price is defined as the opening price on Day 1.

The percentage gain after holding the stock for n days is calculated as:

Percentage gain (n days later) = 100 × (Closing price on Day n − Entry price) / Entry price

For example, the 1-day return is simply 

100 × (Closing price on Day 1 − Entry price) / Entry price

All-Time High vs. Within 10% of High

We conduct this return calculation for stocks making a new all-time high and also for those trading within 10% of their previous all-time high.

For example, imagine a stock hits a new all-time high of $200 on Day 0, then pulls back over the next five days to $195:

• On Day 1, the stock registers an all-time-high buy signal (because it made a new ATH the previous day).
  
• On Days 2 through 5, it generates multiple within 10% signals, because its price remains no more than 10% below the $200 high.

For each of these within-10% signals, we compute the same set of forward returns (1-, 5-, 10-, and 20-day percentage gains) using the formula above.

Bull vs. Bear Market Conditions

We then compare these returns – both all-time-high signals and within-10% signals – across different market regimes.

For this study:

• A bull market is any period when the S&P 500 closes above its 200-day EMA.
• A bear market is any period when it closes below its 200-day EMA.

This allows us to evaluate whether the performance of these signals behaves differently in upward-trending vs. downward-trending market environments.

Results

The tables below show the average 1-day, 5-days, 10-days and 20-days percentage gains for both all-time-high signals and within-10% signals across bull and bear markets.

The cells with stronger performance are highlighted in bold.

Bull Market

Bear Market

Discussion

The results above make one thing clear: buying stocks at an all-time high does not produce better returns than buying stocks that are still within 10% of a prior all-time high.

This holds true in both bullish and bearish market conditions.

One might expect that a stock strong enough to break into new highs during a bull market would outperform its peers, but the data doesn’t support that assumption.

Another common belief is that buying strong names (such as S&P 500 stocks hitting new highs) during a bear market might offer some downside protection. Yet again, the research shows no such advantage.

Even though stocks making new highs face no overhead resistance and all current holders are in profit, these conditions do not translate into superior performance.

In fact, the evidence suggests that stocks tend to be mean-reverting, even at moments that seem most favorable for momentum.

Additional Hypothesis

It’s possible that existing shareholders who bought near the previous all-time high have spent years waiting to break even.

When the stock finally returns to that level and pushes slightly above it, these holders may seize the opportunity to exit at breakeven.

To test whether this selling pressure contributes to the underperformance of stocks at new all-time highs, a new experiment was run.

In this version, instead of buying immediately after an ATH, we introduce a 10-day waiting period.

That is, if a stock makes an ATH on Day 0, we only enter on Day 10 at the open. The idea is to give previous buyers time to sell before we step in.

Here are the results:

Bull Market

Bear Market

The results support the hypothesis: the underperformance of fresh ATH stocks may indeed be influenced by holders from the previous peak offloading their shares.

Once we delay the entry by 10 days – presumably allowing that supply to clear – performance improves meaningfully.

This improvement appears in both bullish and bearish markets.

Another way to examine this idea would be to measure the correlation between (1) the number of days between the previous ATH and the new ATH, and (2) the returns following the new ATH.

If the theory holds, we would expect a negative correlation – meaning the longer the gap between highs, the weaker the subsequent performance.

However, that analysis goes beyond the scope of this post. I may revisit it in a future update if time permits. For now, there are several other trading concepts I want to investigate first.

Conclusion

Bull Market

Bear Market

In conclusion, this study shows that buying immediately after a stock makes a new all-time high is not the most profitable approach.

Even if you choose to trade ATH breakouts, patience appears to pay: waiting a short period before entering can improve results, likely because it allows earlier holders to exit at breakeven.

But when we compare all three scenarios – buying at a new ATH, buying 10 days after an ATH, and buying within 10% of the previous ATH – the data points to one interesting takeaway.

Stocks within 10% of a prior all-time high tend to deliver the best returns (highlighted in bold in the tables above), especially in a bull market.

While ATHs are exciting and often feel like strong momentum signals, the numbers suggest that traders may be better served by focusing on stocks near their highs rather than those just breaking them.

There’s plenty more to explore in this space, and future studies may refine or deepen these findings. For now, the evidence offers a clear and practical insight for momentum traders: sometimes the “almost high” is better than the high itself.