The stock market is rising like a balloon, and that has a certain levitating impact on investors. Who’s most susceptible to news that the Dow is peaking? Richard Peterson with the stock data firm MarketPsych says it’s the people on the sidelines.
“Those people who pulled out money in the financial crisis are going to feel a real pang of need to get back in,” he says.
But if you invest heavily in the stock market right now, he says you risk overpaying. It’s better to put in a little at a time, because prices tend to go down immediately after a spike.
“So if you feel the urge and you want to scratch the itch, so to speak, it’s better to wait a week to a month before you start putting money back into the markets,” Peterson says.
Chris Thornberg with Beacon Economic says the Dow’s increase is not a false rise. The market is in an overall recovery, so investors can feel good about getting back in, if they do it calmly and slowly.
“Keeping what I would have to say is a difficult but nevertheless necessary confidence that in the long run things will get back to where they should be,” he says.
Meaning, they must maintain the confidence not to sell off a lot of stock if…make that when…the market dips back down.