Headlines have been screaming about markets hitting record highs for weeks. This has sparked excitement, but has also triggered a fear of missing out (FOMO), and even anxiety amongst investors. For long-term investors, however, these all-time highs don’t trigger celebration or panic. Instead, they stay grounded, asking “Is the business still getting stronger?” and not “Should I sell?” We examine why experienced long-term investors react differently when the market hits new peaks.

Why All-Time Highs Matter So Much to Short-Term Investors

Markets at all-time highs are exciting times for short-term investors. These peaks feel like validation of good investments since their returns are measured primarily by share price movements. Instead of compounding, these traders focus on timing their entries and exits to make gains. During these highs, they also worry about buying when it is too expensive. As they enter and exit quickly, short-term investors often lack the flexibility to hold onto shares for long if they enter at elevated prices....