September 28, 2018 glacierinvest

As anybody who pays remote attention to the financial news media knows, the S&P 500 achieved an all-time high value last week, again, after nearly eight months since the last high was achieved. These are monumental days for the media and pundits because they stoke conversations and pontificating about market peaks, market crashes, market valuations and the like. As always, it’s really easy to get caught up in the chatter and opinions and to begin second guessing well thought out plans and strategies.

As I mentioned in a previous post, I recently went on a news fast which I found to be incredibly refreshing. I was largely able to stay above the fray of the 24/7 news cycle, not getting caught up in the daily minutiae. As a result of that fast, I have resolved to pay less attention to news throughout the day and to go on a news fast every couple of months.

I bring the news fast up because we all may be better off by minimizing the amount of news we consume. Think about it. Everyone and their grandmother has been trying to call the market top and when the next market crash will occur. A new high in the S&P 500 might cause some investors to think this is the top. It could be. It might not be. What’s an investor to do? Nothing.

When faced with a complicated decision that consists of many unknown and unpredictable variables, the best thing to do the vast majority of the time is nothing. Most, if not all, of us are not capable of processing the amount of information (and keeping it straight) required to make complex decisions. Furthermore, it makes no sense to sell everything if you think you know when the top has been reached unless you’re very confident you can call the next bottom. Market timing is notoriously difficult to do and I don’t recommend it. Lightening up on positions and/or allocations, getting defensive or buying insurance (put options) are better approaches but even then you better have a credible plan in place and stick to it.

So for now, the market continues to move higher. Studies have shown that new market highs often times lead to more new market highs, of course until they don’t any longer. Somebody will get lucky and call the market top whenever it occurs. Of course that prediction may be his/her 10th market call top of this cycle, but hey, she/he still “called it!”. Worrying about market tops is probably not the best use of your’s or anyone else’s time. Having a legitimate investment plan in place and sticking to it is paramount. Emphasizing process over outcome is critical even when it might feel like the process isn’t working in the short-term.