The stock market indices such as the Dow Jones Industrial Average and the S&P 500 are at some record breaking highs. At times like this, people often get into a frenzied like state and throw money around trying to get in on the action. What am I doing about it?
Basically nothing. Although I do have a good amount of cash sitting in my bank account here in Korea earning 2% interest or so, it would be a very unwise thing to invest it now because while the market might perhaps go up even more, it’s more likely to go down at some point at least a little bit, or a lot. I certainly can’t predict the future, but it’s quite rare that the good times keep rolling on for months and years in the stock market without a correction of some sort. Greed never pays off and successful investing is all about being patient and controlling emotions.
When the stock market is at a high, it’s also tempting to sell and take some profits. But, I invest for the very long term (20+ years), so it doesn’t make sense for me to sell solid companies that pay me reliable dividends. If I had a shaky company that I was looking to unload, it might be an ideal time, but that’s not the case for me right now.
What am I doing is waiting patiently, and stockpiling cash. There will be a correction and then I’ll start to buy. I’m hoping for a large one.