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What Should Investors Do Now That The Market is at an All-Time High?
Very few investors worry about their portfolios when they are printing new all-time highs. Just ask the seven richest people in the world…
- Jeff Bezos: $210 billion
- Elon Musk: $177 billion
- Bernard Arnault: $175 billion
- Bill Gates: $151 billion
- Mark Zuckerberg: $137 billion
- Larry Page: $121 billion
- Sergey Brin: $117 billion
The funny thing is, if you woke up with Sergey Brin’s fortune, there is not much you would think could go wrong from there.
But if Jeff Bezos woke up one day with Sergey Brin’s money, he may think there is A LOT wrong!
It’s all relative.
Which is why the answer to what you should be doing right now is also relative…relative to YOUR personal situation.
On the one hand, if your plan is solid, you have a well-diversified portfolio, and you have a good nest egg of cash to ride out a storm, you probably do not have a ton of work to do so long as nothing derails you behaviorally. Keep up with your cash balance while the market is at a record high, and continue to be financially unbreakable. Compounding is a powerful yet often overlooked force.
Need proof? Google the book on Warren Buffett called “How I made my fortune by compounding good returns over 75 years.” (Hint: it doesn’t exist because it would be a boring read.) Don’t work against the fantastic combination of compounding and time by creating avoidable losses.
Conversely, suppose you are still anxious over the 2020 sell-off, the resulting reduction in the dollar value of your portfolio, or you are worried about the NEXT future sell-off.
You have a fantastic opportunity RIGHT NOW to raise cash while the market is at an all-time high and stay invested in a long-term, straightforward, and compounding portfolio. You’ll likely weather the next storm better, since your cash will protect you from having to act rather than trying to react while in the middle of a downturn.
Investors should think in terms of adopting a “survival mentality”:
- Replenish cash at record stock market levels to survive short-term sell-offs.
- Build and maintain an investment portfolio to survive through a lifetime of needs and that outpaces inflation.
- Survive by steering clear of avoidable losses by way of eschewing the siren’s song of stock concentration and comparing yourself to others.
The financial services industry, alongside the media, does a fabulous job of creating complex behavioral issues and total confusion. This is why we go to great lengths to provide you with our unfiltered and straightforward opinion that is grounded in our Team’s expertise and experience.
If you want more control over your time and options, check out our Are We a Fit page and see if we are a good fit for each other. If so, reach out.
Keep looking forward.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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