If you are investing when the markets are high you could be setting yourself up for major losses in the future. Many people think backwards when it comes to investing, they buy when stocks are going up instead they should be buying when stocks are crashing. Reason I say this is because the facts do not lie, when things are going good in the markets, people want to ride the roller coaster and get some easy profits. Billions and Millions of new investment money is thrown into the markets when things are going good, and when things are gloomy in the markets people run for the hills.
But if you think about it in its simplest form, would you buy milk for $7 dollars because you noticed the price going up? The answer is no because milk usually costs $3.49 a gallon so why would you pay double for the price for milk? Unless there is a shortage of milk nobody should ever consider paying more for it, and the same should go for stocks. Three years ago Verizon stock was listed for around $30 dollars a share and now it is steadily close to $52. I personally prefer to pay the $30 dollar per share price, what about you? Not only do you risk buying at the high point only to see capital most likely drop, your yield will be less if it is a dividend paying stock.
OK now that we got that out-of-the-way and you fully understand when people should be buying. What do you buy when the markets are high? The options are index funds, ETF’s, REIT’s, bond funds, and stocks that are trading in the lower range of the 52 week moving average. As of right now the picking might be slim, but the deals are out there. How can you find these investments? Look in Google Finance, Morningstar, or CNN Money. These sites offer a ton of financial information on where to place your money when things are bullish. But I am going to give you some examples of where I would put my money when the markets are high.
Investing When the Markets are High:
SDIV – ETF
GOV – REIT
GE – Stock
Pimco Bond Family – Bond Funds
These choices are either priced relatively low or not affected as much price wise by the recent bull run. For example GE back before the major recession was trading between $40-50 dollars a share. As of this posting the stock is currently trading at 21 dollars a share. The stock still has a long way to go to even come close to trading at those high levels. REIT’s are always a good buy because they pay such a high dividend yield, this particular investment is still trading in the 20 dollar range, compared to some of its competitors who are over $45 dollars a share. The Pimco bond funds have ticked up a bit in price since 2010, but not as crazy as the blue chip mutual funds, you can safely park your money in those bond funds and wait to see if the market corrects itself, (aka crashes) then at that point you will move back into equities.
Did you expect me to list Bit Coins, gold or maybe Greek debt above? I hope not, because those types of speculations are for the birds. When it’s all said and done you can always just save it in an online account and have the cash ready to strike when the next market crash hits.
Comment if you have a favorite stock, bond, ETF, REIT, or Mutual fund you invest in when the markets are high.
Rich Uncle EL
