Sticking with stocks or stepping into them at this point in time could deal a blow to your portfolio’s value.
First and foremost, if you’re struggling with the question of whether to back off of or lean into this current market, rest assured you’re not alone.
The S&P 500 is currently up more than 7% from its early October low, and higher by more than 100% since last March’s low when stocks cratered following COVID-19’s arrival in the United States.
Making these oversized rallies even more daunting is the fact that not once since last March’s bottom has the S&P 500 suffered a correction of 10% or more.
Right now, we’re in the early part of what’s usually the best three-month stretch for stocks in a given year.
Of course, none of these short-term concerns is a real risk to long-term investors who are genuinely looking a year or more into the future.
This may help keep your focus on the bigger picture: According to data from online brokerage firm Charles Schwab, between 2000 and 2019 — a relatively normal environment not crimped by a long-lived global pandemic — the S&P 500 tumbled at least 10% from a peak in 11 of those 20 years, averaging a 15% setback during each correction.
Most investors innately know stocks move forward in long-term timeframes, even if they log the occasional loss in the short run.
As for your riskier, more aggressive trades, go ahead and shed the ones you know aren’t built to last, and then draw lines in the sand for the names that lie somewhere between being a long-term and short-term holding.