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Health & Fitness

New highs for the Dow and S&P - time to buy or sell?

I addressed this question a little more than 3 months ago, when the Dow closed around 15,500 in early August, and had been in the news for hitting its all-time high. Since then, the stock market retreated a bit, yet as of this past week, hit new all-time highs, with the Dow as of this writing over 15,800 and the S&P over 1,780. I basically will give the same guidance as I did then.

Given the volatility of the markets over the last decade, quite often, the answer is not a simple yes or no. In general, market timing is a “fool’s game” with even the smartest investors unable to consistently time the market. In essence, it requires you to be correct twice. The first time is when to sell? The second time is when to get back in? That is why you will often hear people state, “It is not timing the market, but time in the market” that can lead to investment success. 

The answer quite often revolves around your investment goals. If money is earmarked towards a long term goal such as retirement and you are years away generally it will make sense to stay the course and ride through both bull and bear markets. Markets tend to run in cycles, with long term patterns (secular) which can last on average 15 years, to shorter term periods (cyclical) that may last a much shorter period of time. The investor’s ability to withstand periods of volatility and uncertainty also play a key component as behavioral finance will often show that “the masses” tend to buy at periods of investments being overvalued, while selling at periods of undervalue. This buy high and sell low mentality can lead to poor results and keep investors out of the markets during key times where growth can occur in a short amount of time.

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With the stock market seemingly reaching new highs each day and the bond market showing some vulnerability to fears of rising interest rates, ensuring that you have the correct asset allocation for your investments is extremely important. Stocks and bonds will always be a key component to most investors’ portfolios, and both serve as an important piece. 

It is always recommended that you speak with a financial advisor who understands your individual circumstance. Given the tremendous run up in the stock market, it may make sense to do some rebalancing, taking some profits off the table and making sure that your allocation towards equities has not outgrown your target asset allocation. Asset location is an important component of this as you will want to be mindful of potential capital gains tax ramifications that may exist depending on the type of account you hold the asset in (qualified vs. non-qualified).

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To discuss how this subject or other financial subjects may relate to your own financial circumstance, please contact me at the contact information below: 

Christopher N. Congema, CFP®

President, Investment Advisor

Core-X Wealth Management, LLC

900 Walt Whitman Road, Suite 208

Melville, NY 11747

631-923-2485 Phone

www.core-xwealth.com

chris@core-xwealth.com

This communication is from Core-X Wealth Management, LLC, a New York State Registered Investment Advisory firm. The information in this blog is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.  

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