With the S&P 500 Setting Record Highs, History Points to 1 Clear Move

It's fair to say 2026 has thrown investors more curveballs -- the war in Iran and soaring Treasury yields among them -- than they bargained for. Amid those headwinds, the S&P 500 and other major U.S. equity gauges are marching higher.

Investors can't directly invest in an index, so for this exercise, I'm using the Vanguard S&P 500 ETF (NYSEMKT: VOO), a nearly $1.1 trillion behemoth that's the world's largest exchange-traded fund (ETF). As of Sept. 4, the VOO ETF is up 13.6% year to date. That's commendable work in just over eight months, but the S&P 500's 2026 showing is even more noteworthy considering the aforementioned challenges.

When the S&P 500 hits a record, more often follow. Image source: Getty Images.

Still, some investors are pensive. The war rages on, Treasury yields and inflation are high, and the midterm Election Day is coming. Obviously, none of us possess crystal ball, but history is instructive when it comes to what may be in store for the S&P 500.

Highs aren't sell signals

A quick disclaimer: The following historical facts apply to the S&P 500, not individual stocks. With that in mind, the index's history after it notches an all-time high is compelling for investors holding the Vanguard ETF.

In early June, Nationwide published a piece noting that the S&P 500 had posted 461 record highs since 2013. Alone, that says investors were rewarded for staying the course after the index posted a new record. But wait, there's more, and the more is really compelling. The S&P 500 delivered cumulative returns of 400% from 2013 through June 2026, and the percentage by which the index was higher 12 months after hitting record highs was often well into double digits.

Fidelity research backs that up. Going back to 1950, when there were just 48 states and before the moon landing, the average gain for the S&P 500 a year after tallying a record was 12.7%.

For investors holding the Vanguard S&P 500 ETF today who are feeling especially skittish, there are other reasons to stay the course even when records are set anew. Fidelity points out that $10,000 invested in the S&P 500 on Jan. 1, 1988, would've been worth nearly $523,000 on Dec. 31, 2024, assuming no time out of the market. Conversely, had an investor tinkered, moving in and out of the market simply because all-time highs were reached, they would've inevitably missed some of the index's best days, dramatically altering their long-term returns.

Calendar help is coming

There are benefits in embracing an S&P 500 ETF for the long haul. As for what's in store in the months ahead, the calendar holds some clues.

October is the last month in the weaker of the two six-month stretches for stocks. Yes, Election Day could be a challenge, but markets appear at peace with the notion of a divided government when 2027 rolls around. Speaking of 2027, that's the third year in the presidential cycle, and as I noted last month, that's usually the best of the four years in which to own stocks.

For those who prefer data over historical musings, the expected third-quarter S&P 500 earnings growth rate is 28.5%, which, if met or exceeded, could pave the way for more highs.

Todd Shriber has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.