Stock Market Reaches an All-Time High! What Now?

Investing
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By Gary Alt

Learn more about Gary on NerdWallet’s Ask an Advisor

I’m not sure who makes more money on the stock market — Wall Street or the media. The stock market is a never-ending source of fresh news because it changes every day, and any writer can spin that into a new story. Whether the market is up or down by the slightest fraction of a percent, writers are trying to turn that into something more newsworthy than Lindsay Lohan’s latest brush with the law. That’s the nature of our 24/7 news cycle.

The latest news is that the Standard & Poor’s 500 index reached an all-time high recently.

Here are some of the headlines:

Investors Cheer: S&P 500 Hits All-Time High (CNNMoney)

The more dangerous headlines suggest that you should begin worrying about what’s next or you should do something different with your investments.

Stock Market Hits All-Time High, Now What? (CNBC)

If S&P 500 Hits 2000, What’s the Trade? (USA TODAY)

A few years ago, when the economy was all gloom and doom and the stock market was suffering, a number of my clients told me they were so tired of the news that they just turned off the TV. They were tired of listening to the negativity because they just wanted to continue living their lives, and they knew that things would eventually get better. They held onto their investments, knowing the market would rebound as it always does.

That same approach might be just as appropriate in light of the new highs. It’s not a reason to live life like it’s the Roaring ’20s. I wasn’t alive during the Roaring ’20s, but I hear it was quite a party. My best advice: Continue living your life as normal, knowing that there will always be new highs and there will always be downturns. Both are temporary.

See, the fact is that the market is doing exactly what it’s supposed to do. Corporate profits are at all-time highs, and the economy is expected to continue growing. Therefore, the stock market should be at an all-time high. The market is acting rationally right now.

There’s no need to do anything different unless your financial needs have changed.

So go on living your life. Relax and put your energy toward things that matter to you. Eat healthy most of the time. Love your family. Smile at strangers. And most importantly, turn off the TV.