Should you still buy stocks at market highs?

THIS is a common question at the beginning of a year: Should you still buy stocks? In particular, what stock should you buy?

In 2026, these questions carry extra weight. The Straits Times Index (STI) is off to a strong start, surpassing the 4,700 level for the first time. Record highs have a way of making even simple decisions seem stressful.

On this note, I would reframe the question entirely. It’s not what you should buy, but what you need. This simple shift in focus matters.

In the excitement of new highs, it’s easy to be swept off your feet. But lasting investment success comes from knowing what you’re after, and staying true to your goals. Here are three principles to help you navigate these times when records are being broken.

Principle 1: Know what you want

The first principle sounds obvious, but it isn’t. Many investors enter the market without being clear on their goals. They see an interesting stock and want in. But they haven’t stopped to ask themselves a basic question: What am I actually trying to achieve? This disconnect often leads to disappointment.

For instance, if you want dividends, shares of Nvidia will not satisfy your need; the stock pays almost nothing in dividends.

Conversely, if you want high growth, you won’t get it from a real estate investment trust (Reit) such as CapitaLand Integrated Commercial Trust (CICT). The Reit is simply not built that way. Instead, CICT is designed for steady, reliable income, not rapid capital appreciation.

Consider the Reit’s dividend track record. Over the past five years, its distribution per unit (DPU) has increased by 5.5 per cent per year, rising every single year. While its growth will not set your pulse racing, this steady performance was delivered through tumultuous periods including the pandemic, sharp interest rate hikes, and global trade disruptions.

This quiet, almost peaceful growth in the Singapore Reit sector is rare. But if you went in expecting 20 per cent DPU growth each year, you will be disappointed. CICT simply isn’t that kind of stock.

The lesson is that being clear on what you want saves you from chasing the wrong opportunities. It also saves you from the frustration of owning a good dividend stock that was never meant to meet your needs in the first place.

Principle 2: Buy because you want to own the stock

Knowing what you want is just the start. The harder part is sticking to it when the stock market throws up opportunities.

Take Tesla. Shares fell last week after Nvidia revealed Alpamayo, a family of open-source artificial intelligence models for self-driving cars. It’s a direct challenge to Tesla’s Full Self-Driving solution.

But if you are seeking dividends, Tesla’s drop should mean nothing to you. Tesla pays no dividend; hence, you don’t have to react. In fact, you don’t even have to have an opinion on whether Tesla is a good buy today.

Yet, volatility has a way of making us forget our goals. When stocks start moving, up or down, the urge to do something can overwhelm our best intentions. We have seen this pattern before. This exact sequence played out about a decade ago when oil prices collapsed in 2014.

As shares of major oil and gas firms such as Keppel Corp fell significantly, investors piled in, believing that they were getting a bargain. The reasoning appeared sound at the time.

But here’s the problem: For many of the bargain hunters, this was the first time they were looking at the oil and gas industry. Few understood how long down cycles could last, and how long it could take for businesses to recover. With hindsight, this disconnect proved costly for many.

The oil-price downturn would turn out to be “a long and harsh winter” as Keppel’s chief executive officer later admitted. Hence, the recovery in stock price took much longer than anticipated.

The point is this: A falling stock price is not a reason to buy; neither is a rising one. The only reason to buy is that the stock fits what you have set out to achieve.

Principle 3: Commit to the long term

Every investor has a different idea of what long term means. For some, it’s one year, for others, two. For me, it’s five years or more. My co-founder David Kuo takes an even more extreme approach: He never sells any stock he buys.

While that may sound radical, the mindset has a useful side effect: It forces you to be extraordinarily careful about the stocks you put in your portfolio.

If you have to pick stocks knowing you won’t sell them, every purchase becomes a commitment to understand the business deeply. You can’t afford to be casual. You can’t afford to chase. Crucially, the statistic backs it up.

A recent 125-page DBS Group research report examined 15-year rolling periods for the STI. The results were striking. Every single 15-year rolling period beginning between 2000 and 2011 delivered positive returns, without exception.

Without dividends, annual returns ranged from 2.4 to 9.8 per cent. Add dividends back in, and the range of long-term returns improved to 6 to 13.3 per cent.

Dividends, it turns out, are the silent force that transforms ordinary returns into satisfying ones. They don’t make headlines nor generate excitement. But compounded over years or decades, they can make a real difference.

The takeaway is that time is your greatest ally – but only if you have the patience for it to work.

Get smart: Your success is your own

Here’s the final point I want to leave you with. You’ll be successful when you achieve your goals, not someone else’s. It’s okay if you missed Nvidia.

It’s okay if you don’t catch the next hot stock. But if you bought shares that fulfil your financial needs, then you’ve succeeded.

This is harder than it sounds. We live in an age of comparison. Social media is filled with investors showing off their wins. Financial news is filled with stories of stocks that doubled or trebled in months. It’s easy to feel like you’re falling behind.

But investing is not a race against others. It’s a journey towards your own financial future. Your needs are different from mine. Your timeline and risk tolerance are different. The stocks that are right for you may be completely wrong for someone else, and vice versa.

Every one of us has different needs and different wants. The sooner you define yours, the sooner you can tune out the noise. As Singapore’s STI breaks new records, keep these three principles close.

They won’t tell you what stock to buy, but they’ll help you figure out what you actually need. In the long run, that matters far more than any stock tip.

The writer owns shares of CICT and DBS Group. He is co-founder of The Smart Investor, a website that aims to help people invest smartly by providing investor education, stock commentary and market coverage.