Equities at All-Time Highs Despite Wars: Is It A Good Time To Invest?

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Equities at All-Time Highs Despite Wars: Is It A Good Time To Invest?

May 18, 2026

Raph Antoine Raph Antoine
Equities at All-Time Highs Despite Wars: Is It A Good Time To Invest?
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Equities at All-Time Highs Despite Wars: Is It A Good Time To Invest?

Raph Antoine
Raph Antoine
Updated:

Are you stuck because of one of those questions?

  • Is it wise to invest when the market is at an all-time high?
  • Should I invest in a fairly expensive market given Geopolitical risks?
  • I have received an inheritance or sold my company - is now a good time to invest?
  • Should I wait for a market correction before investing?
  • Will the market always bounce back?
Before I became a Portfolio Manager well over 15 years ago, I briefly went into a glamourous field of finance – Mergers & Acquisitions. After my degree in Financial Engineering, I was eager to tackle some complex models and intellectual challenges. Oh boy, how I was disappointed! The models turned out much simpler than I imagined. So much for the fancy maths. But here is the great part. You will understand basic stock market valuation in the next 10 minutes. Today, I won’t show you a chart of how the market performed in the past. It often doesn’t convince the investors I speak to.  I will answer all above questions and explain the reason why the market will keep hitting new highs. Peaks are not the exception. Markets not being at their peak are.

KEY TAKEAWAYS


  • There are two key components of the stock market: investors’ mood and earnings growth. These two factors explained over 85% of the S&P 500’s total return over the past decade. The third component – dividends – is usually well understood by investors.
  • Mood is defined by multipliers. As of April 2026, the forward P/E ratio for the S&P 500 stands at 20x, borderline greedy territory. The US CAPE ratio is deep into greedy territory. Despite geopolitical risks, US stocks are not cheap. MSCI World is more reasonable. The risk is that these multipliers may drop substantially, particularly if investors become more gloomy if geopolitical risks translate into a recession.
  • Has it happened in the past? Yes, but earnings growth always made up for it. One of the worst periods to live off your portfolio was from 2000 to 2012, when S&P 500 went nowhere. P/E ratio dropped by half over that decade. The euphoria in 2000 was replaced by fear and caution in 2012. Why did the S&P 500 bounce back? Leave them enough time and earnings growth offsets any drop in mood. Over that decade earnings doubled.
  • Despite Equity Indices at All Time Highs in April 2026, does it make sense to invest? Yes, peaks are not an exception. Peaks hide even higher peaks. Since the 1950s, the S&P 500 has been within 5% of an all-time high over half the time.

Kumiko the serial entrepreneur goes adventure cycling!

It's 2025. She Calls Ethan, The M&A Banker to sell her company.

👧🏻 Kumiko: Hi Ethan, I want to take a sabbatical and cycle the world. I founded a company that produces Golden Retriever snacks. Can you sell it for me? How do you come up with a price?

🧑🏻‍💼Ethan: Sure, I will tell you a secret. Look, we drive fancy cars and wear suits here, but bankers’ models to value companies are archaic. How much is your company making?

👧🏻 It makes €1 Million in profits per year.

🧑🏻‍💼Listen, valuing a company is quite simple. M&A Bankers basically look at what similar companies sold for in the past 12 months. On average, companies in your sector sold at 10x profits. Congrats – today your company is worth €10 Million!

👧🏻 Can this 10x multiplier change over time?

🧑🏻‍💼Yes, it can. It depends on the company’s and its sector prospect but also on the mood often referred to as sentiment, of the buyers and sellers.

👧🏻OK, sell it now. Can’t wait to hit the road. See you next year, Ethan!  🚴‍♀️🌍

2026: Kumiko wants her company back.

👧🏻 Kumiko: Hi Ethan, I just came back from my trip. I had the time of my life. Now, I will start a family, so I may as well take back the company.

🧑🏻‍💼 Ethan: You’re so lucky! The new owner just called me. He wants to sell. But you know, profits have risen by 7% since last year. The company now makes €1.07 Million.

👧🏻 What about the famous multiplier?

🧑🏻‍💼 It’s still 10x. Investors’ sentiment hasn’t changed. You can get your company back for €10.7 Million.

👧🏻Amazing. If only buying stocks was as easy!

🧑🏻‍💼The process is much easier. The valuation? Quite similar. Let me show you.

What if KUMIKO invested in the stock market instead?

The easy way to value a stock market

How much money can I lose?

MARKET MOOD - investors Historical swings

Press Arrows to read highlights. Toggle between regions and forward vs historical measures
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Evolution of Market Mood

From 1995 to 2026
Forward P/E
12.5
ⓘ LONG TERM TREND: average P/E ratios have been consistently rising over past decades, driven primarily by the rise of index investing, margin expansions and other factors including sector composition shift or buybacks. We may not be going back to 1990s averages.
Date
01/1995
Source: Bloomberg using MSCI Indices. World refers to the MSCI World Index. Bankeronwheels.com
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