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All-Time Highs!

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Not that kind of high! Just because I live in Colorado where the green stuff is legal doesn’t mean I partake. I can see where you might think it though given some of my posts. No, I’m talking about market highs.

The Market is High!

I have a friend in his late 20s who is trying to time the markets. To this I say, consult the experts.

Warren Buffett:

We continue to make more money when snoring than when active.

Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.

Peter Lynch:

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

This one from Alan Abelson is great:

Do you know what investing for the long run but listening to market news everyday is like? It’s like a man walking up a big hill with a yo-yo and keeping his eyes fixed on the yo-yo instead of the hill.

But the best argument against market timing is in the chart:

Even major pullbacks gradually become minor blips over the very long term. Read more of what I think about over on InvestmentZen.

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Comments

  2. Buy & Hold, low cost mutual funds. Only way to go. It seems to surprise people that I only check my Net Worth once/year (12/31, since 1994!), but avoiding it during the year keeps me from getting anxious. Day to day, I automate my savings and focus on making smart decisions with what flows thru our checking account. Works for me!

    • Interesting because my mindset is the opposite. Now that I’m FI, I stress less about deploying additional money. The bigger the pile gets, the less I care.

      • I’m kindof the same way Mr. 1500. I think my stress level around investing is WAY lower now.

        If I want to deploy capital and the market isn’t behaving, I just go “Meh!” and come back the next day.

        Hard to get excited about Mr. Market’s shenanigans these days.
        Mr. Tako recently posted…Profitability Doesn’t Matter?My Profile

  4. I did my annual asset reallocation back in April. It’s a mechanical process for me which forced me to sell stock.

    Part of my reallocation calculation is based on CAPE also known as Shiller PE. This means I reduced my US stock allocation further so I guess you could say I’m one of those people anticipating a correction. Only time will tell!

    I retired early so I would prefer that all stocks go up forever! 🙂
    Mr. Freaky Frugal recently posted…Are you an Oblivious Wage Slave?My Profile

    • No doubt at all that a correction will happen and probably soon. And I agree that the CAPE PE is scary, but only to the short term investor. If you’ve got decades, it won’t matter much.

  5. Hoooooly crap. Well hey, it’s nice to see some growth. 🙂 I do worry about the inevitable fall on the chart, but I guess that’s the reason we’re paying off debt so feverishly while the going is good!
    Mrs. Picky Pincher recently posted…Should I Eat That?My Profile

  6. I don’t understand timing the market. A little research will show that the market goes up about two-thirds of the time. Why try to predict the one-third??? I’m just glad I know I’m not smart (or dumb) enough to do that.
    Fervent Finance recently posted…To Buy or Not to BuyMy Profile

  8. I find this is something I have to keep telling myself over and over, otherwise I drift towards thinking I can time it. These quotes are a great reminder.

    Within real estate investing especially, people always think they can time the market. Maybe that is because it moves a little bit slower than the stock market? Even though everyone thinks it, very few can, and when they do it is luck – not repeatable. So my strategy is to keep buying at all times!

  10. Unfortunately, or fortunately for me, I am not as smart as Warren Buffett or Peter Lynch. And if these smart and successful people say “Hey, don’t try to time the market”, what would I try to do it?
    These people have a proven plan, and the smartest way would be, at least for me, to follow successful people’s advices

  11. I’m not into timing the market as well, honestly I’d love to see a huge pullback (without hurting the financial freedom community) so that we get a chance to throw more money in at low valuation. Here’s hoping we at least get a blip because up and up and up is unsustainable.

  13. I appear to be in agreement with everyone.

    I’ve got a bunch of index funds, for the most part, and I just keep putting money into them and “letting it ride”. I often piss people off when I say “I didn’t lose any money in 2008/2009.” They ask me how I could, how did I know to pull out in time, and I say “I didn’t sell anything, so I didn’t lose anything. Market bounced back within 4 years and is now up 50% from the highs of 2007/2008.”

    Really makes them angry.

  15. I actually made a spreadsheet analyzing record highs from 1/3/1950 – 9/20/2016 (16,788 stock market days; almost 67 years). Here were some key findings:

    – 6.84% of all trading days were record high days
    – After the market hit a record high, what happened 3 months later? Well, 67.16% of the time, the market was higher – by an average of 1.95%.
    – How about 6 months after the market hit a record high? 75.87% of the time the market was higher than the record high 6 months before – by an average of 4.50%.
    – How about 1 year after the market hit a record high? 73.52% of the time, the market was higher, by an average of 9.85%.

    So basically, my mantra is this: Market hit record highs? Good, buy more shares.