I’d like to continue our theme investing dangerously.
Today we will discuss, The danger of buying at all-time highs: A big concern in today’s market is that prices are too high. After all, as of this recording, the S&P 500 and NASDAQ are both up around 14% this year.
If you are invested in stocks, then you should have a long-time horizon. Over many years and decades, the broad markets will continue to rise and today’s all-time high will no longer seem so expensive.
On the other hand, if you are a short-term investor, keeping your cash in a money market account or in short-term bonds is far more prudent. This will allow you to avoid worrying about the markets dropping from their relatively high prices.
The key is understanding your time horizon. Once an investor appreciates when they will need their money, they can invest their funds prudently and not need to worry about the current stock prices.