The short version
- Record highs are common: 78 of 149 years since 1871 ended with UK shares at a record high after inflation.
- After a record high, shares beat inflation over the next ten years 85% of the time, a little less often than after other years (91%).
- Even the worst-timed investments ended well ahead of cash after twenty years, though some took more than a decade to recover.
- Nobody can reliably predict the next fall. Time invested has mattered more than timing.
Part of Worries and myths. For the big picture, see how often UK shares have lost money since 1871.
- 78 of 149years since 1871 ended with UK shares at a record high, after inflation
- 85%of ten-year periods starting just after a record high beat inflation
- 91%of ten-year periods starting in other years beat inflation
Record highs are normal
If a market rises over time, it spends a lot of time at new highs. That’s what has happened in the UK: 78 of 149 years since 1871 ended with shares at a record high after inflation, about half of them.
So “the market is at a record high” describes a normal year, not a rare warning sign. Waiting for prices to fall first has often meant waiting while they kept rising.
What happened next
To test the worry, I compared what happened after years that ended at a record high with what happened after every other year.
Investing just after a record high still beat inflation most of the time
Share of periods in which UK shares beat inflation, 1871–2020
- Starting just after a record high
- Starting in any other year
Source: Jordà-Schularick-Taylor Macrohistory Database (R6), UK, 1871–2020. Total returns with dividends reinvested, before fees and tax. Analysis: Invest in ETFs. Chart licensed CC BY-NC-SA 4.0.
Show the data
| Next… | After a record high | Median a year (after a high) | Other years | Median a year (other) |
|---|---|---|---|---|
| 1 year | 76.9% | 5.7% | 66.2% | 7.4% |
| 5 years | 77.3% | 5.0% | 85.7% | 7.6% |
| 10 years | 84.9% | 5.4% | 91.0% | 6.1% |
Starting just after a record high, shares beat inflation over the next ten years 85% of the time, compared with 91% after other years. Typical returns were a little lower too: 5.4% a year after inflation, against 6.1%.
So starting at a high has been slightly worse on average, but not the disaster the worry suggests. Over one year it made almost no difference to the odds.
To pick your own start year, use the returns explorer.
The worst possible timing
Here’s what happened to £100 invested at the start of some of the worst years to begin, measured in that year’s money after inflation, compared with £100 left in cash.
| Invested at the start of | First year, after inflation | Shares after 10 years | Cash after 10 years | Shares after 20 years | Cash after 20 years |
|---|---|---|---|---|---|
| 1929 | −13.5% | £141 | £126 | £158 | £74 |
| 1937 | −15.9% | £103 | £65 | £117 | £44 |
| 1973 | −34.2% | £94 | £83 | £327 | £143 |
| 2000 | −6.7% | £96 | £126 | £166 | £105 |
| 2008 | −32.2% | £144 | £86 | – | – |
Bad timing hurt. Investing at the start of 1973 or 2000 still left you below where you started after ten years, and in the 2000 case cash did better. But in every case with twenty years of data, shares ended well ahead of cash.
Nobody can reliably tell when the next fall is coming. History suggests the length of time invested has mattered more than the day you started.
If you're still nervous
- Only invest money you won’t need for five years or more. Keep an emergency fund in cash first.
- Consider investing gradually. Shares beat cash in about two years out of three, so money waiting on the sidelines has usually missed out. But spreading your investment over several months reduces the chance of putting everything in just before a fall, and can make starting easier.
- Spread your money widely. A global index ETF holds thousands of companies in many countries. What is an ETF? explains how.
About the data
- Source: the Jordà-Schularick-Taylor Macrohistory Database (release 6), which economists use for long-run returns. These figures use its UK series for 1871 to 2020, the latest year it covers.
- Shares means the UK stock market’s total return: price changes plus dividends reinvested, before fees and tax. An index ETF tracks something similar, minus its small annual fee.
- Cash means the interest on short-term government bills, a standard stand-in for savings. Real savings accounts have paid more or less than this at different times.
- After inflation means adjusted using the UK consumer price index.
- Periods are whole calendar years, overlapping: 1871–1880, 1872–1881 and so on. Yearly data hides falls that recovered within the same year.
- A “record high” means the highest year-end level so far of UK shares’ total return after inflation.
- This is the UK market only, and the past is no guarantee of the future.
The analysis script and the derived data are kept with the site’s source files, so anyone can check the sums.
This page describes what has happened in the past. It isn't a forecast or advice about what you should do. Investments can fall as well as rise, and you may get back less than you put in. Read the full disclaimer.
Sources
- Macrohistory Database, release 6, Òscar Jordà, Moritz Schularick and Alan M. Taylor. Consulted 13 October 2026. Licensed CC BY-NC-SA 4.0.
- Jordà, Knoll, Kuvshinov, Schularick and Taylor (2019), "The Rate of Return on Everything, 1870–2015", Quarterly Journal of Economics 134(3).
- Jordà, Schularick and Taylor (2017), "Macrofinancial History and the New Business Cycle Facts", NBER Macroeconomics Annual 2016, volume 31.
Analysis run 13 October 2026.