How to Approach Investing When the Markets Reach All-Time Highs

December 23, 2016

How to Approach Investing When the Markets Reach All-Time Highs

With the DOW Jones Industrial Average striving to reach 20,000 (19,933.81 as of December 23), it creates an investment environment that can easily send investors into a frenzy over what sorts of investment moves should be made. Understandably, investors don’t want to lose out on the upside of the recent market upswing, but there are a few ways to set yourself up for success so that you don’t need to make any rash money moves based on a reaction to current market trends.

It’s important to remain focused on your long-term financial goals in the midst of short-term stock market activity. While it’s tempting to react to current market conditions, take note of a couple ways to approach investing so that you are poised for long-term financial success through all market cycles.

[Related: Ways to Overcome Investment Analysis Paralysis]


Diversify, Diversify, Diversify

If we’ve said it once, we’ve said it 1,000 times: diversifying your investment portfolio is one of the wisest ways to invest for the long-term. There will always be market volatility. Sometimes the markets perform well and go up (like they are right now). And sometimes, like at the beginning of 2016, they show stagnant or poor performance. Regardless of what the stock markets do on any particular day, having a diversified portfolio means that you hold a mix of investments ranging from stocks (domestic and international), bonds, real estate, and cash. Each of these assets respond differently to market volatility and other economic events, which winds up offering you a measure of protection against losses.

The idea is to position yourself to take advantage of some upside so that your army of dollar bills can work hard to earn you more over time (stocks), while simultaneously protecting your investment portfolio from the downside (bonds). A balance investment portfolio helps to provide a more stable ride over the course of your lifetime.


Set It and Forget It

Most of us are not day traders, nor do we have the stomach for the amount of risk involved in trying to time the market to buy and sell at just the right time. As a long-term investor, you’re not looking to gamble with your future. This is why setting your investments and then forgetting about them is a smart financial decision. In more academic terms, the concept of “set and forget” is called dollar-cost averaging. This is a systematic approach to investing that automates when you buy into the market. Investors who buy at regular intervals monthly, quarterly, or semi-annually are practicing dollar-cost averaging

Dollar-cost averaging removes the emotion from your investment decisions and sets you on a path to buy into the market regardless of what the market is doing. Sometimes you’ll buy high and other times you’ll be able to buy low and your investments will average out over the course of your investment horizon. What’s even better is that you do have some flexibility with dollar cost averaging so you can make adjustments along the way. When the markets are low, you can decide to buy more shares at the time and when the markets are high you can buy less, but the point is that you are systematically set up to buy on a regular schedule so you’re never tempted to try to time the market or pull out of the market. You are able to guard yourself against making rash emotional investment decisions with dollar cost averaging, while still leaving yourself open to financial opportunities.


Final Thoughts

At the end of the day, it’s most important to stay the course, even when markets are performing at all-time highs. Avoid the knee-jerk reactions at all costs. We have a saying, “Be greedy when others are fearful and fearful when others are greedy.” When you are invested for the long-term, you can pay attention to market activity without succumbing to a fear-based or greed-based response. And if you have questions about your investment portfolio, don’t hesitate to reach out to your financial advisor and touch base. If you’re thinking about your financial future, now is a great time to revisit your financial outlook with a financial advisor and confirm you’re doing everything you should be doing to achieve financial success.


You can always reach out to us if you have a financial question or just want to get to know us better. Don’t be a stranger. Contact us directly anytime at [email protected] and [email protected].





Most Recent Episodes

3 WORST Types of Financial Crooks (Don’t Get Scammed!)

In the financial world, there are a lot of crooks that try to get into your pockets. From metaphorical crooks selling a bad product to literal crooks stealing your money, we'll cover the different types of financial crooks to watch out for and how you can protect...

Financial Advisors React to NFL Players Spending Their First Million!

Not many Americans will ever make over one million dollars in a year, but professional athletes regularly make that and more. In this react video, we'll see how NFL players spent their first million dollars after making it into the league. As we review their mistakes...

Everything You Need to Know About Real Estate Investing!

Over the years, we have had some great conversations about real estate investing. In this episode, we put together the ultimate guide to show you everything you need to know about real estate investing! In this episode, you'll learn: How to get started in real estate...

The Truth About The FIRE Movement! (Is FIRE Still Possible?)

Since the advent of the FIRE movement several decades ago, we have never experienced a period of higher inflation until now. With the market down over 20% and inflation at 40-year highs, is FIRE still possible in 2022? If it is, what does it take to become financially...

Top 3 Most Controversial Money Issues! (Our Hot Takes)

We have some unpopular opinions about controversial money topics. In this episode, we'll discuss our three biggest controversial hot takes, including our thoughts on nice cars, wealthy people, and real estate. You won't want to miss this one! In this episode, you'll...

Why College in America is Broken [And What You Can Do About It]

College costs in America have skyrocketed over the last few decades, as has the total student loan debt in the country. In this episode, we'll talk about why college in America is broken, what went wrong, and how you can do college the right way. In this episode,...

Why This Recession is Going to Be VERY Different!

Every recession is different, and this one is no exception: we are currently experiencing once-in-a-lifetime inflation and started the recession with historically low interest rates. Will this recession be different from any other we've experienced? How will it end...

How to Protect Your Finances During a Recession! (By Age)

The S&P 500 recently crossed over into bear market territory, and many in the financial media believe we are in a recession. Bear markets and recessions affect everyone differently, and we think there are certain things you need to focus on (or forget about) by...

Avoid These Home Buying Mistakes! (Even During a Crazy Market)

Housing prices have gone up over 30% in the last two years, and over 70% when you account for rising interest rates. However, there are some glimmers of hope in the housing market for those looking to buy. Will the market cool off anytime soon? How can you buy a house...

Financial Advisors React to OUTRAGEOUS Money Advice on TikTok!

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and Tik Tok is the new frontier. Is there good...

Financial strategies to your inbox!

Never miss a show again, get special offers and early access. Ready to build wealth and start owning your time? 

You have Successfully Subscribed!