The New York Stock Exchange in lower Manhattan. Photo via Pixabay

By Mickey Welcher

As a Registered Investment Advisor, one of the most frequent questions I get in a stock market like the one we’re in is: “Should I take profits and wait for a pullback?” It’s true that we’re due for a pause, but my answer is always the same: NO!

The idea of “market timing” gets a lot of play on cable TV investment shows. Inevitably, the host, donned in a wrinkled dress shirt and unkempt tie, loudly instructs viewers that the market is overvalued and to sell their stocks sooner rather than later. Though it makes for great theater, timing the market is a fool’s game. You may be able to do it once in a great while, but that has much more to do with luck than skill.

I grant you that we’ve been in a bull market for more than eight years—since March 2009. It’s the second longest one in history. There is understandable concern that the end is near, and many investors are fearing that they’ll lose much of their gains if they don’t get out now. The problem is that the so-called experts have been claiming that the market has peaked for the past three years. In that time, I’ve talked more than a few clients out of selling and going to cash. If they did, it would have been a huge mistake for their portfolios.

Mickey Welcher

Here’s a case in point. The market hit new highs in early March and then proceeded to trend slightly lower for a few days. It started to look like we were beginning the long-awaited pullback. Much to the chagrin of some investors, I advised staying the course and watching how things developed over the next few weeks. The market won’t completely drop in a day, I argued, and there will be many “up and down” periods in the meantime. I went on to say that while waiting means we may not sell at the absolute peak, the risk to potential gains far outweighs the slight losses we’d might see.

That’s exactly what happened. Over the past two weeks, we’ve witnessed continued upward momentum in the stock market thanks to some very strong corporate earnings reports. If my clients followed their instincts, they would have completely missed that opportunity.

The best thing to do is wait until there is TRUE change. This will occur over weeks, not days. For now, stay the course, keep your asset allocation balanced and try to not get caught up in timing the market. It may sound contrary, but doing otherwise will most likely cost you a lot more money.


Mickey Welcher is founder of Envestim, a low-cost financial advisory firm for anyone looking to start or manage their portfolio. He can be reached at mickey@envestim.com.

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