Maybe we should start calling it the Chuck Norris Market after the martial arts action hero, Trump supporter, and inspiration for the all-powerful joke meme:
When Chuck Norris goes long, the price target is infinity;
When Chuck Norris buys stock, the bid-ask spread is negative;
When Chuck Norris splits a stock he uses his bare hands.
Well, you get the idea.
Arguing with this bull market is a bit like fighting with your spouse. If you're right, it doesn't matter. But if you're wrong, you'll never be allowed to forget it.
Every move higher ratchets up the tension. Each uptick in the S&P 500 means we're that much closer to a correction or a pause, or just not going up anymore. Each uptick raises the "Fear Of Missing Out" (better known as "FOMO" among market pundits) another notch, sucking in more capital kind of like the way a firestorm sucks in fresh oxygen to feed the flames.
But if you're not in the market, or are sitting on a lot of cash waiting for the correction, the feeling can be excruciating.
Anybody who's been through a couple of housing bubbles in New York, San Francisco or London knows the feeling. It goes something like this, in precise order.
Everything's ridiculously overvalued. You're constantly getting outbid on fixer uppers with 1 ½ baths, rotting decks, warped floors and leaky roofs in "up and coming" neighborhoods. You think that if you wait, eventually the bubble will pop, and you'll be able to get a nicer place at a much lower price. And you have the sneaking suspicion that you are the ultimate contrarian indicator and that the moment you do buy, the market will drop like a stone.
That said, there's another issue that may be holding back at least some investors right now: fear of validating Trump. The president has repeatedly taken credit for the market's gains, and unlike almost everything else he says or tweets, there is at least a correlation with the truth on this one. The market is nicely higher since the presidential election, and has continued to soar long after "reasonable and responsible" people thought it would, or should, correct.
For those people, the only consolation is the hope that when when the inevitable correction does happen it's going to be "huuuuuuuuge!"
So if, for all those reasons or others, you find yourself sitting on cash while the indexes soar, here are five thoughts to help you get off the fence.
Apologize to Yourself, and Move Along
Forgive yourself for missing out. It happens, and is happening all the time. You're not stupid. You're not alone. You're not unique.
Be Focused At This Moment
Think precisely about why you want to be in the market. If it's just to make money, maybe you need to get a different hobby. If it's for retirement, and you're under 50, you should probably just put the cash to work in an index fund like Jack Bogle says to do. If it's for college and your kid is under 10, you should probably just put the cash to work in an index fund like Jack Bogle says to do. If its for a house down-payment and you're under 30, you should probably put the cash to work in an index fund like Jack Bogle says to do.
If those conditions aren't true, you should probably consider changing some of the other variables: delaying retirement, getting your kid into a good scholarship sport (rowing?), or looking for less expensive places to live.
Limit Potential Losses
Make friends with trailing stop-losses. If you're really nervous about getting into the market, try setting a trailing stop-loss under your next position, say 5%. If the market goes up, it'll ratchet up with it, and lock in the gains. If the market turns sharply lower, it should protect the bulk of your capital. Set the stops at an appropriate percentage for the volatility you expect in what you're buying. This will keep you from getting "stopped out" on short-lived, but sharp, downturns in those hot tech stocks such Netflix (NFLX - Get Report) and Action Alerts Plus holding Alphabet (GOOGL - Get Report) .
Capitalize On Time
Leverage time, not money. Remember, if you'd bought the Dow Jones Industrial Average on Oct. 16, 1987 -- the last trading day before the 1987 crash -- you'd be up 11 times today. Sure, buying after the crash would have been better. You'd have made a 15-bagger. But either way, you'd have made money over the long term. The mistake was staying out of the market, not worrying when you got into it.
When you finally decide to act, don't try to be an action hero like Chuck Norris. Don't try to make up for all the money you didn't make earlier by playing exotics like bitcoin or leveraged ETFs or complicated options strategies. Listen to billionaire Warren Buffett, find yourself a nice index fund and settle down to sleep-filled nights and long-term growth.
You ready to trade this red-hot market? Probably not. TheStreet's Executive Editor Brian Sozzi goes around the newsroom in the latest Jolt to see what's hot in the week ahead. Get ready for earnings from big tech names such Action Alerts Plus holdings Apple (AAPL - Get Report) and Micrososft (MSFT - Get Report) .
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