The market is doing so well the sky must be falling

43 thoughts on “The market is doing so well the sky must be falling”

  1. This is a great reminder. There’s the low hanging fruit (minimizing fees and expenses, finding a strategy that works for you) and what falls in your locus of control (how much you save and invest, how efficient your lifestyle is, your ability to earn income and in what ways, and what you can do to be happy today). Anything outside of that may be interesting to watch – I really enjoy learning about the stock market and the economy because I think they’re interesting subjects. If I was doing it to get the absolute best investment returns possible, I’d likely be disappointed with how much time and attention I’d put in compared to the reward I was getting.

  2. It’s very easy to shoot down a discussion about expensive stocks: If you don’t believe in business as usual you must be a doomsday prepper and believe the sky is falling. But that’s a false dichotomy. The moderate cautionary voices don’t predict the end of the world, but merely a temporary transition period with less than average returns (think Bogle, Malkiel), before we return to the high equity returns again. And that would have implications for the FIRE crowd:

    1. Epic article you wrote, ERN! The larger point of this one was just to enjoy the good times while they’re here because, as we all know, they won’t last. πŸ™‚

  3. I am both enjoying the ride, and thinking about the end of this delicious gravy train!

    You are right that returns have been great over the eight-plus years of the bull market in US stocks, and we should take time to appreciate our good fortune if we have been in the market.

    We’re also in it for the long haul, but I have changed my new money asset allocation a bit to start building up some more cash. It could be tomorrow, or it could be five years from now, but the bull market will eventually end, and when that does happen, I look forward to buying some stocks that look overvalued by historic metrics today at a discounted price in the future. But I do recognize that stocks could keep going up for several more years before that happens, which is why I am not blindly selling everything.

    1. “I am both enjoying the ride, and thinking about the end of this delicious gravy train!”

      A good balance! I think you’re doing it right. You aren’t focused on the potential future, but preparing for what might come without using emotion as a decision-making criteria.

      We have more than three years in cash, so we’ll be able to weather a lot of what might come without selling much stock.

  4. I’ve done very well the 28 years I invested in stock mutual funds. I am well aware of cycles. Sometimes though while continuing to invest in stock funds and other asset classes I might need extra cash to remain debt free or cover an unexpected expense. So I realize gains on my best performing asset when that happens. When you invest in different asset classes some will zig while others zag. While I do think we are overdue for a stock crash, I have been buying precious metals, cryptocurrency and municipal bonds on the side to prepare for the crash.

    1. Nothing wrong with a little preparation. We have three years of living expenses in cash, so hopefully we’ll be okay and avoid selling in a down market.

  5. At some point you have to worry about today instead of what may come. Take advantage of what you have today. We’ve been doing very well the last few months and why we wait I’m going to save anything we can.

  6. Haha- I love this! For the love of all things chocolate, we’re enjoying the gravy train! Like you, we are focused on the long haul… taking the ups and downs as they come. Thanks for the reminder!

    1. Yes and this has been going on for quite awhile! While people were swearing off stocks, I bought company stock at 15% discount. One batch I remember fondyi bought fot $2 per share for 1700 shares. I got it at a March 2009 price. Sold all of it above 30. I am alone in saying this but I credit the federal reserve for making slow moves since 2009. It is not one man who makes or breaks the economy. It is the federal reserve. I figure the fed is in a bind though now. It has to raise rates very slowly to take excess out of the cost of housing without causing unemployment to go up. I am within nine years of social security distributions so I can handle an asset allocation of 60% stocks for now. Maybe even 65%.

  7. I live in the Netherlands. I’ve invested in worldwide stocks, in dollars. The value of my investments has been flat this last year, even when the value in dollars has been rising. This is due to the fact that the value of the dollar has come down compared to the euro. On the other hand, a few years ago when the dollar became stronger compared to the euro, I saw extra profits.

  8. I’m enjoying the ride and honestly never really think about the market but I have some friends that think they are geniuses with the way they have been buying in and out of the market. I do wonder if the quote from Warren Buffett will come to fruition “Only when the tide goes out do you discover who’s been swimming naked.”

  9. Enjoying the ride, but prepping for the end of the gravy train. Take advantage when you can and enjoy the fruits of the previous round πŸ™‚

  10. This is a great attitude to take. No one truly knows where the market is heading or when it will pop or drop. Enjoy the ride while it lasts. Grow some nerves of steal when things are rough and ride the storm out. Over the long-term everything will be fine!

  11. It seems like the financial media has been calling for this recession and major market crash to occur since 2011. Nobody knows when the next recession
    will occur. During the past recessions, I remember they did not officially call it a recession until there was 2 negative quarters of GDP growth. As you wrote, enjoy the what the economy and market is giving.

  12. TSR –

    Enjoying the ride, but not changing the consistency in investing. If something is undervalued, I am investing. Since I still work at a company, my 401k goes in at every pay period, etc.. and there is no trying to time market on my ends. As long as dividends are safe and show promise for future increases – that’s what it’s all about. The ride is a long one, no doubt.


  13. I’m with you on this, Steve – who knows what the hell’s going to happen with the market, so don’t worry about it.

    I have, however, used this opportunity of a strong market to sell off a sizable amount of stocks in my Roth that I had bought back in the day when I thought I was a professional stock-picker!. Now I just need to buy some VTI with the cash. So the question is, throw it all in now, wait for the supposed drop that will take place eventually, or spread it out over the next couple years. What’s your thoughts?

    — Jim

    1. I’ve always been the “invest it all” kind of guy. Rather than trying to time the market – if I had a sum of cash to invest, I’d probably throw it into our brokerage account all at once. It’s true that the market could crash tomorrow. It’s also possible that it won’t crash for another two or three years. In the end, I like to make things simple.

    2. I don’t have the source anymore, but I once read a compelling study where the conclusion was that if you have a big chunk of cash to invest, you should dollar average it over about 6 months. If you invest everything at once you take some significant risk, but conversely if you invest it “too slowly” (e.g. over 2 years) you are statistically losing on opportunity. 6 months seemed to be what the study concluded was the right amount of time.

  14. We did our annual withdraw for living expenses this Spring and we’ve already gained more than we took out. People can always find an excuse not to invest (or do other smart money tasks) but they’re just missing out and getting farther and farther behind on goals.

    1. A lot of the time, that’s so true. Just keep things simple and stick to it. It’s a sure fire way to be successful. Is it worth reducing that success for the possibility of even MORE success? When it comes to day trading and attempting to time the market, I won’t touch that with a 10-foot pole. Too much risk.

  15. and for people like me that we’re not in the market for the long haul but for 10 yrs tops (won’t detail why), what to do? cash out?

    1. Hmm…if I were looking to cash out in the near term, I’d definitely do so whenever I thought the market was about to crest. Of course, there is no real way of determining that, so just taking your best shot is probably all that you’ll be able to do under such circumstances.

  16. Hehe, tell that to the guys who lost it all in the tulip mania. Tulip prices have just never recovered. πŸ™‚

    While I don’t think the sky is falling, I’m not pleased by big market gains — every dollar invested today at high prices, earns less than dollars invested at lower prices.

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