“Buy low, sell high.”
The old saying that everyone and their mother knows. It is the best and most simple advice to creating wealth no matter what asset class you are talking about. So why is it that CNBC, Bloomberg and the rest of the mainstream financial media always seem to be so optimistic when the stock market is hitting record highs? Wouldn’t common sense tell you to sell? “Sell high.”
This week the Dow Jones Industrial Average closed at an all-time record high of $19,083.
The S&P 500 also closed at an all-time record high of $2,204.
If you watch the media, they literally use the words “All Time Record HIGH” in their headlines yet nobody gets on the TV and says it is time to sell.
Here is the actual definition of “All Time Record High” according to the Your First Million Unofficial Dictionary:
All Time Record High
- There has literally never in the history of the market been a better time to sell
- How could someone possible justify not selling at the highest point that the market has EVER seen
- Get the F*CK out while you still can!
If you would have purchased the Dow back in the year 2009, you could have picked up a share of the Dow for a mere $7,033. Today you would be close to tripling your money. Is this not good enough for you? Are you not okay with getting just a measly 24% annual return on your 2009 Dow investment? Take the money and run!
Many are calling for the Dow to hit $20,000! Will it get there? It is very possible… It could certainly continue to climb. That is not the point though. The point is that right now it is very HIGH, regardless of how high it could still go. Nobody can ever call the exact top, and to be honest, I would never want to try to sell at the very peak anyways.
Trying to guess the very peak is near impossible, not to mention probably the riskiest thing you could do in investing. Right now we know that the market is high. Why not sell now and take your huge gains while you are still in the clear? Will you miss some profits if the market decides to keep climbing… YES! But who cares! It’s just like I said, trying to call the exact peak and get every last penny is GREEDY, and you will most likely get yourself hurt.
I am completely out of the stock market at this point. I actually sold everything earlier this year while the Dow was around $18,000 and took my large gain all the way to the bank. Did I miss the ride up to $19k? Yes I did… but I am still glad that I sold when I did.
I took the money we made in the market and have since used it as a down payment on a small multifamily rental property. This property will cash flow nicely every month, and will continue to cash flow even when the stock market does crash and everyone else is getting slaughtered.
Be smart, use common sense, and don’t get greedy. It could be a great time to sell while you are still in a position to laugh all the way to the bank. Who knows, tomorrow you could be crying instead.