FYI: It’s the most common question I’ve received for many months. “I’m new to investing. With the market near its peak, should I wait for the market to get a bit cheaper?” Such investors know their history—at least some of it. Markets rise and markets fall. Now that we’ve seen a very visible fall, the same folks are wondering if they should wait some more.
Regards,
Ted
http://assetbuilder.com/andrew_hallam/should_you_worry_when_stock_markets_hit_all_time_highs
Comments
One of the most storied investors on Wall Street was the late Marty Zweig. Mr. Zweig was famous for admitting with great frequency, when queried about the stock market that he "was worried".
Admittedly, the stock market will do what it will, whether we worry or not. But worry is a very salutary phenomenon -- it's nature's way of focusing the mind. Consider an investment landscape without people "worrying":
1. Company management: Nothing to worry about if we miss our numbers, we don't hold costs down, or revenues decline.
2. Company auditors: Nothing to worry about if we don't catch fraudulent numbers.
3. Security analysts: Nothing to worry about if we miss the problems at a company.
4. Ratings agencies: Nothing to worry about if we wrongly characterize a firm's liquidity and solvency.
Ever more all-time highs in the stock market is not guaranteed -- at least in a timeframe relevant to individual investors. It took something like 25 years for the stock market to regain its 1929 levels. Japanese investors are still well below the highs they experienced in 1989. How do you say "no need to worry in Japanese?"
Not worrying is the enemy. Worrying is your friend.