022 WF: Buy? Sell? Hold?

WealthFast Podcast show

Summary: In 2009, the Dow Jones Industrial Average -- a composite measure of 30 large-cap U.S. companies -- stood at 6,500. Now it's back to pre-recession levels. Does this mean the Dow has reached its peak? Should you sell your equities? Or does this mean it's on the way up? Should you buy more? Neither of the above. The past is the past, and it's not related to the future. The question you should ask yourself is: are US equities currently a good deal or not? The price of stocks three years ago is irrelevant. Just because the stock is rising doesn't mean it's upside has been maxed out. Conversely, just because something has fallen a lot doesn't mean it's downside is tapped or limited. So let's look at some of the current market conditions: More jobs are being added. More homes are being built. In metropolitan Atlanta, for example, 37,400 new jobs were created last year. Atlanta isn't special: it's indicative of trends happening across the nation. Meanwhile, the sales of existing homes at every price point (from starter homes to luxury abodes) is rising, according to the National Association of Realtors. Inflation, thus far, has not been an issue, in part because the Fed has promised keep rates low until 2014. What happens after 2014 is anyone's guess. Vanguard analysts predict 2.5% inflation for the next decade, but a prediction is just a fancy way of saying "guess." So what should you do? Should you buy, sell or hold your stocks? None of the above. Unless you're a stock-market scholar, avoid market timing. Continue to dollar-cost average your investments.