Should You Invest in Stocks at All – Time Highs | Podcast Episode #69

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market. We got the S&P 500, the NASDAQ. We have the Russell, well, maybe not so much the Russell, but the S&P, the NASDAQ, you have the Dow. These things are all making big pushes towards new all time highs.

0:16
So the question today is, should you be buying investments at the all time highs of the stock market? Let’s go ahead and go over a summary of the market in, in the course of 2019. Well, let’s actually back up a little bit. Let’s back up to quarter 4, 2018.

0:33
At the end of September, you had a market that was looking pretty promising, and then in October, you had a huge sell off. On the monthly chart, you had in November, a slight bounce, but you had a lot of volatility still both higher and lower. And then December, the whole bottom of the market fell out.

0:48
I think from the September highs to the December lows, it was something like a 22 percent correction. December 26th, we finally bottomed and we’ve been shooting higher. And the, towards the end of the, the, the year for 2018, and then in 2019, in January and February, the market just kept on ripping higher.

1:09
So now we’ve seen in the month of April, we hit new all time highs. Then again, we saw a huge sell off in May, where things started getting a little bit ugly again. Don’t worry, we had a big time rally in the month of June. We saw new all time highs get formed.

1:26
But then again, in July, we peaked out and that resulted into a sell off that carried over into August. We had some really nasty chop action, real tight consolidation pattern. Not as bad as what we saw in May, but then we started rallying again.

1:42
Going into September, we get right up to the all time highs, we falter once again, and we sell off at the end, actually around mid March of September to the beginning of October, we sold off and then quickly in October, we bottomed out and we’ve been rallying ever since then.

1:59
Yes, we’ve had a few rare down days in between, but now we’re sitting, I don’t know, about 1 percent off of the all time highs. The all time high is uh 3027.98, and we’re sitting at 2990 flat as of this recording.

2:15
So, what should you be doing here? Because we’ve seen clearly. Going back to April, the sell off in May, the rally in June, July, the sell off in late July and throughout August, and then the rally in September, and then again, the sell off thereafter and the small rally that we’ve seen since in, in October.

2:35
Do you, do you start buying stocks? Do you start buying the shares of Apple or Amazon or maybe even Netflix. Netflix reports after today, but Do you, do you buy shares at Netflix considering it’s been over $400 and now it’s sitting in the 280s? What do you do as a trader, as an investor?

2:52
Do you go ahead and keep buying new shares? If you’re doing a Roth IRA or you’re doing, you know, dollar cost averaging, which a lot of people are crazy about, I’m not too crazy about it. I think it’s good if you’re never going to manage your own finances. If you just want to keep putting money away in the stock market over the course of a long period of time.

3:13
That, that’s probably good because otherwise, you’re likely to sell at the bottom and buy at the top. But right now we are at the top. So should you be buying? And, and I’ll tell you, I don’t think you should. And the Trading Block, one of the features in the Trading Block is, is some long term investments. It’s a new feature that I’ve added.

3:28
I used to have an old investment system offering, and it’s, it’s kind of like in legacy mode. I stopped offering it but kept, uh, providing the updates to people that subscribed to it. However, there’s nothing there to invest in right now. There really isn’t.

3:43
You’ve got a market that’s sitting 1.1 percent, a little bit more than 1 percent below all time highs, and you’re trying to tell me that even though we’ve seen it falter three previous times, we should go buy these. Now, if you look at what where the market’s been going back to January of 2018, 2018, not 2008.

4:03
We really haven’t done nothing. 2018 in January, we peaked out at 2872. Where are we at right now? 29, 28. That’s only like 3 percent higher than where we were at at 2018 of January.

4:21
And then we had a big sell off there the following month. We had a big selloff, obviously like we just talked about in October. So you got two right there. And then you had a third one in May of this year, and then you had another one in late July and August. That’s your 4th.

4:36
And now, we had a quasi one in late September and we’re sitting at the all time highs again. We’ve seen the story many, many times. The problem is there’s really nothing to keep rallying the market. You’re seeing a lot of it with Donald Trump right now.

4:52
Every day he’s saying something. I, I’ve seen it with the futures. He will say something 10 minutes before the futures markets on a Sunday night open up to simply boost the markets higher. If he’s doing that, he’s a little bit insecure about how, how stable this market is right now.

5:08
And look, I know that there is a wide range of opinions on Donald Trump and the purpose of this podcast, and I have to say this, anytime I get get into politics, but let’s face it, politics is a big part of the stock market right now because you have a president that’s very active in the stock market and you can’t ignore it.

5:26
His tweets move the stock market up and down every day, every single day. He says something on Twitter that the markets have a reaction to. He did a press conference today, and holy cow, I don’t really think I’ve ever seen this before, but he says, I think the stock market’s gonna go up today.

5:42
The Algos responded and it pushed higher immediately thereafter. Now, the market’s still down on the day because it’s kind of given up those gains from early on, but still, this is, this is kind of uncharted territory for traders and for investors too. And whether or not you liked Obama as president, and I’m not getting into to whether or not you should have voted for him or whether you should not have voted for him.

6:04
All I’m gonna say is, is that the market never cared about him. The market did not care about President Obama. It ignored him completely. Yes, it paid attention to Janet Yellen, but it didn’t care about Obama. The market cares about Trump, and it makes it hard. But going back to the, the premise or the discussion that we’re having here with this podcast episode is whether or not you should be buying investments at the all time highs.

6:28
I would say no. We’ve hit these highs more than 4 times and we continue to struggle. There’s not a lot of reason to think that unless we break out of these, these highs that we’re going to be doing, doing anything special here. I really don’t think it’s gonna happen. Yes, long term, the market can, you know, will go up over time, but that doesn’t always mean that it’s gonna go up right now.

6:47
I have a friend. Good grief, he opened up a retirement account, put a whole bunch of money into it. And he just went ahead and bought it. Just, just bought it, man, didn’t, didn’t consider where the market was at, didn’t consider whether or not this would be a good opportunity, because guess what?

7:06
Sometimes it’s better to be in cash than it is to be in a long position. So what do you do? You wait, you have to wait for long term investments, you gotta wait for the good opportunities to come your way. Let the market create the opportunities. Don’t try to force opportunities upon the market.

7:23
The market’s not gonna care what you think. Market doesn’t care that you think that Micron has a low PE right now and should be a lot higher than what it is. Market doesn’t care that Netflix has already dropped more than $100 from its all time highs. It simply does not care.

7:38
What you have to do is you have to wait until this market that’s at all time highs. Comes right back down because guess what? If we do get a correction here, we get a 10, 15 percent correction. Stocks like Netflix have already been beaten up pretty good. They’re still gonna go lower. More than likely, Netflix will go lower.

7:55
I would be shocked if it didn’t. Stocks like Apple, if you go back to 2018, the quarter 4, it dropped a lot. I went ahead and bought some for my long term accounts. I bought Apple, you know, mid mid 100s. And it’s provided a really good return since then.

8:11
But I waited for those opportunities. I’ve got a lot of cash in my long term accounts and I’m simply waiting for the opportunity. To buy them at some really good prices. So let the markets create the opportunities. Don’t try to force it upon the market. This, this is not a good time to be building big long term positions with the hopes that in a year from now or two years from now that they’re going to be doing something special for you because a good chance that they’re not.

8:34
All throughout time, patience, patience, patience has awarded investors incredibly. It rewarded them back in 2000 when the NASDAQ bubble crashed and finally bottomed out, what was it like 2002, 2003. When that finally happened, it provided a good opportunity to get long on some really good cheap places that had been hammered from the stock market.

8:55
Even more so was 2008, the great the Great Recession, right? And, and when it bought in March of 2009, there were some spectacular buys out there. There was Ford for under a dollar. I actually had a friend that told me he bought Ford at $1 and, uh, paid for many years’ worth of vacations.

9:12
Kudos to him. I’m glad to, glad to hear that he did pretty well with that. But there was a lot of those opportunities. And so you gotta, you gotta wait, and you’re not gonna time the bottom perfectly. You’re just not. But there’s a lot of things that I talk about in some of my training courses, and I’m not gonna get into it here and I’ve, but I’ve even talked about it in some of my, my podcast episodes too.

9:29
So, so there’s some tidbits of information scattered all over the place. Um. But there’s a lot of indicators that I use that help me to to gauge whether or not we’re in a long term bottom formation. And, and you can see that when you start seeing the panic selling really take place and then you see the sharp buying that that follows right after that.

9:46
That’s a good sign that the market’s trying to bottom. And look, we, we’ve talked about how long this market’s been going on. We’re, we’re in the 16th inning of a 9 inning ballgame. Yeah, we’re, we’re in extra innings here. I mean, the, the market, it’s, it’s stunning how long it’s going. We have a Fed that’s very accommodating and doesn’t believe in business cycles.

10:02
We have a president that’s doing everything that he can to to keep it up so long enough so that he can win re election. I don’t, I don’t blame them for doing it. You know, politicians since the beginning of time have done anything they can to, to manipulate anything to, in order to be re elected.

10:18
It’s just, that’s the nature of politics. But, um, yeah, we’re in the 16th inning of a 9 inning ballgame and, and at some point, We’re going to have a sizable correction. So you want to be ready for that. You don’t want to be buying when, when the market’s at these all time highs here.

10:33
You want to wait for opportunities. And even if you have a shorter time frame, let’s say that you’re only looking for something that maybe you can hold for 8 to 12 months, then, then, OK, that’s great, but wait for that opportunity too. You don’t want to buy something that you’re going to hold for 8 to 12 months.

10:49
When the market’s sitting at all time highs, because there will be a correction. But then you say, well, what if the market goes up another 10 percent here? Fine, there will still be a correction that will give you an opportunity to, to get, to get long on the stock market. You just have to wait.

11:08
So that’s gonna do it for today. I wanted to uh answer that question because that’s something that I’ve been asked about a lot and uh wanted to uh give you some of my thoughts, and some of my feedback. Again, not investment advice. This is just an educational podcast that details exactly what I do as a, as a trader, as an investor in the stock market and gives you my strategies and, and I hope that you’ll check out some of my training courses that, that I’ve put together that’s helped me out through the years, and I’ve got more coming along, uh, that I’m excited about ushering out.

11:27
And there’s some new changes in the Trading Block. I am getting ready to send out a big email on that. So if you haven’t done so yet, go to shareplanner.com and sign up for my email and you will. Be in the know about the the changes that are going on there. I hope you guys all have a great day, great evening, and God bless.