Given that the market is moving back up to record highs and this bull market has been the longest of all time, it is a great time to be a little cautious.
The market is "relatively" high, so it is important not to buy into the excitement that is generated at this level. Because it is relatively high, the potential is significant for it to move down sometime in the near future. People often get emotionally involved at this juncture.
While emotional involvement can lead to spectacular success in sports, the opposite is true in investments. Keeping calm while others get too fired up is essential in investments. This is just as important at the bottom of a bear market as it is at the top of a bull market. The bottom of a bear market is usually the best time to buy stocks, but you have to disassociate from the general naysaying of the crowd who are then running for cover.
This point is you want to avoid FOMO like the plague. FOMO is Fear Of Missing Out. If purchases are made at this level, the fall will be much more painful. Just don't do it. If you are already heavily invested and at much lower prices, just hold on and keep your head about you. Remember, always buy quality companies at low prices and hold long term. This statement has served me well. Properly applied, it will serve you well too.
Like in a bidding situation for a house, if everyone is clamoring to go higher and higher to "win" the house bidding, the winner will later feel the pain of overpaying. This was the case in the great recession. Many felt great pain for years after misguided quick decisions.
So watch out for those overly excited people. If you want to be excited, refocus your excitement in to watching the college basketball finals.
