Yes, the stock market has rewarded investors quite handsomely during the past 10 years since the Great Recession. Surely it can’t continue to keep going up, so shouldn’t I sell now to avoid losses that are eventually going to occur?
Yes, I’m certain that over time the market will fall, but I have no clue as to when. Markets will continue to rise and fall over time, but despite the plethora of stock market prognosticators, no one can consistently determine when the markets will fall or rise. Trying to time the market is a foolish endeavor in both good and bad financial times. So, what should you do?
Stop worrying about a potential falling market or missing out on the next market rise, instead ensure you have a diversified portfolio of stocks, bonds, and other investments that best match your risk profile and helps you meet your financial goals. If you are willing to hold a risky portfolio, your portfolio will benefit when markets rise and conversely take a hit when markets fall. If you hold a more conservative portfolio, your portfolio will typically go up less than the riskier portfolio in an up market but fall less in a down market.
So stop looking every day at your investment portfolio, wondering whether it is up or down and whether you should buy or sell. Instead, create a diversified portfolio and monitor it much less frequently such as quarterly or perhaps even less frequently such as annually. If your established asset allocations deviate from your model portfolio, then you can make the necessary adjustments at regular intervals.
Let me know if I can help you develop a portfolio that best fits your needs.