Why all-time highs should scare you…

Sean BowerThe market is up, it’s hitting all-time highs, everyone is jumping up and down in joy…

And that’s just, plain scary.

Here is why you should be scared, and what your next move should be:

We’re in unchartered territory. The stock market is hitting record highs and stocks are flying at the moment.

Everything appears to be great for the average investor on its face, but that feeling could be very short-lived.

Have you ever heard the saying, “be fearful when others are greedy and greedy when others are fearful?”

If not, it’s probably the perfect time to study it closely. In essence, it’s telling you to go against the masses. When everyone is saying you should be defensive and sell, it’s a good time to buy. When everyone is yelling ‘BUY! BUY!’, you should be ready to sell.

This is the wisdom of Warren Buffett, and I’m bringing it to you now because the yelling to buy is growing louder.

With the market reaching new highs, your current investments are likely looking quite good in the shorter term, but here is why you need to stay alert:

• The market (S&P 500) is pushing the 2,100 mark, a level at which it’s never been, but now there’s little more room for it to climb. While it may still rise slightly, it’s much more likely that a hefty fall will precede any significant upswing.
• The last two times the benchmark S&P 500 hit a new ceiling, it then fell back down to its long-term moving average, which is the average price of the index over the last 150 days. This time, that fall would be roughly 9,500 points if everything holds true.

Any drop like that could be devastating for your trades, which is why I recommend being defensive while everyone else is greedy. Nobody knows for sure what the market will do next, but very recent history is warning us right now.

Bookmark and Share facebook twitter twitter

Leave a Comment