Even if you are semi-active in the market, you should avoid buying stocks at ATH.

Let’s take a case of AMD, which is now trading at an ATH. While the stock is up 323% in the last year,

• ~20% drop in August after the Q2’25 earnings as the company’s Q3 forecast missed expectations.

• ~25% drop in Nov’25 due to profit taking after the OpenAI x AMD deal

• Finally, ~30% drawdown due to weak guidance and the Iran war.

We are near certain that the stock will have another 30% drawdown before the year is out.

The same story repeats for all the other names (take a look at the drawdown charts of Micron & Nvidia — both of which are multi-baggers)

The math, while simple, shows the surprising upside if you are patient.

If, instead of investing at an ATH, you wait for a 20% drop and then the stock runs 20% above its previous ATH, your total return will be 50%!