Jason Gabrieli, CFP and Catherine Allen-Carlozo, CFP discuss whether you should invest in the market when it is at an all-time high.
When the market is at an all time high it is natural to keep thinking “all it can go is down” and wondering if you will lose your hard earned cash by investing in the market when it is so high.
But, how historically accurate is that?
Tune into this episode to learn:
- Whether you should invest in the market at all-time highs or wait for the market to go back down.
- The most consistently profitable strategy for investing in the market.
- How often the market is at an all time high.
- Should you invest large lump sums in the market or should you invest small amounts consistently?
[00:55] The unprecedented growth of the S&P 500 in 2020
[01:40] What your brain probably tells you when the market is at an all time high
[03:24] Can you really time the market?
[04:10] What is herding and do you make this mistake?
[04:26] How often is the market at all time highs? (more frequently than you think)
[05:58] What would happen if you invested your money on any random day since 1990?
[07:26] What are you investing FOR?
[09:18] Instead of asking yourself if you should put your money in the stock market, ask yourself THIS.
[11:11] What is dollar cost averaging and why is it the BEST investment strategy for YOU?
- The market volatility in 2020 was unprecedented. There were 30 all-time highs for the S&P 500 in 2020.
- The irony of timing the market is that it feels like there is never a good time. You can never really time the market.
- Since the housing bubble market crash, the S&P 500 has seen 270 all time highs. This is about 20 per year.
- If you are going to invest in a diversified portfolio of stocks, it doesn’t matter when you invest.
- Investing at any time (on any random day) from January 1988 until today has an 11% return after 1 year. While investing on days with all-time highs from January 1988 until today has a 14% return after one day.
- Rather than thinking if you should put your money in the stock market or not, consider this question: “what’s the job of this money that I am putting to work”
- Be in the market in every sector and every time period instead of timing the market. Routinely investing in diversified index funds like the S&P 500 is a practical way to do this.
Connect with Jason Gabrieli: LinkedIn
Connect with Catherine Allen-Carlozo: LinkedIn
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[01:11] “At its low point, in which was actually March 23rd of last year the s&p by the end of the year was up 68% by those times it had gone to some 30 all time highs throughout the year, so it went down, went up, went down, went up, it was crazy volatile. ” - Jason
[02:37] “I think the ironic part, and the part that is scary for a lot of investors is that it almost feels like there’s no good time because when the market was down in March by the numbers that’s the best time to invest because it’s down but your mind, at that point, is telling you it’s going to keep going down I can’t put money in now because I’m going to lose even more and now we’re on the other side of it, we’re on the side where it’s up 68% and now our minds are telling us well don’t invest now because it’s going to go down.” - Jason
[05:07] “Roughly 14% of all trading days stocks closed at an all time high. So, that’s a lot more than most people would think - that the market is at an all time high that frequently.”
[08:20] “I’ve heard this so many times over the years, especially this year, when people said maybe we should scale back a little bit on being in the market and the question is ‘well, what is this money for’ ‘what is its purpose’ and you have to have a purpose for your money” - Catherine
[10:50] The market is random and unpredictable and so picking the peak is an impossible thing to do with any consistency and predictability; and know that the numbers support you being invested as long as it is a long term proposition - it almost doesn’t matter where the market is today. - Jason
[11:11] “You can get in at the all time high and still do well because you are getting in but you are not getting out again” - Catherine