The “Slap in the Face” Award this week goes out to all the folks who watched the stock and bond markets set new highs and are itching to get in on the action. I’m telling you, don’t do it!

There is $55 trillion on the sidelines waiting for a reason to get back into the market, and much of it belongs to the little guy. And new highs are the best way to lure the average investor back into stocks.

[ad#Google Adsense 336×280-IA]In the 30 years I have been in this crazy business, I’ve seen that every time the market gets hot or overheated, the small investor gets excited by the news.

Then the big numbers finally convince him that you really can make money in stocks, and he jumps in with both feet.

It’s a tragedy that has played out over and over.

The little guy is always the victim.

And it’s a guaranteed loss.

You should have been itching to get in the market last February or early March when we had been handed our heads in the sell-off… or even after the Brexit mess… but not now.

“Buy low, sell high” does not mean buy at new highs.

There are two truths about the markets. And you must incorporate them into your thinking, or you will never make any money.

One, no matter how bleak it looks, the market always rebounds to new highs. In just a couple of weeks recently, it shot up over 1,300 points. This was in the midst of what was supposed to be the end of Western civilization, according to Brexit critics. Or at least the end of the Western economies.

Some collapse!

The second truth is, no matter how good stocks and bonds look now, this market will sell off too. And all the usual talking heads will be claiming this could be the big one, again. If the market drops like a rock again, history teaches us the little guy will wait for the bottom, the deepest part of the spike downward, and will sell at a loss… again.

I wasn’t exaggerating when I used the word tragedy.

So, just this one time, be a part of the market that lets the other guys make the mistakes. Let the other guy buy into the frenzy and take advantage of what has to happen, another sell-off… maybe even a bear market.

Is it market timing to do what I am suggesting? Kind of. It’s a strategy that has a ton of history to support it. And if nothing else, it will at least get you better prices than what are available now. You probably won’t pick the bottom, but you won’t ride it all the way down either.

Buying at new highs is just not the advisable thing to do.

And if you do follow the herd, get the capital loss tax forms out now. You’ll need them.

Yes, I am that certain of the outcome.

Good investing,

Steve

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Source: Wealthy Retirement