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Can You Still Make Money in This Historically High Market?

October 5, 2017
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These past few years have been some of the best years a stock trader could hope for. According to Business Insider:

About 54% of large-cap mutual-fund managers are beating their benchmarks in 2017, the highest-ever success rate at this time of year, according to Bank of America Merrill Lynch data going back to 2009.

As a result, the pros have made a healthy profit off of the bull market, and now it is sitting at its highest level in history.

Everyone knows the age old adage of “buy low, sell high.” It is ingrained into every investor when they begin their first forays into the markets. So what happens when the market is already high? Do you still buy stock?

CNN Money says yes, but to avoid playing a game of extremes:

Don’t try to pick highs and lows, or time the market. That’s best left to the professionals. Instead, buy stocks monthly or quarterly through what’s known as dollar-cost averaging to smooth out the fluctuations and risk of buying stocks.

The idea is to play the value game rather than the news game. By betting on companies over the long term, CNN Money says you can play the wider trends of the market rather than the headlines.

This type of approach is similar to that of Warren Buffett, who invests in companies that he believes hold intrinsic value rather than a short burst of gains. This more conservative strategy has proven its viability over the years and is a great option for investors in the current economic climate.

As always though, don’t count on the markets staying up forever:

There is always the chance of what stock market pros call “an exogenous shock” — an unpredictable factor that roils markets. And there is a long list of known risks around the world: North Korea, Brexit, a slowdown in the global economy.

As such investors can wait for a drop in prices, but the uncertainty of any of these bear factors would make the markets highly unpredictable. Make sure to assess the risks before making such a play should it emerge.

To read Business Insider’s article on how stock pickers are having their best year ever, click here.

To read CNN Money’s article about whether it makes sense to buy stock in the current market, click here.

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