Seasoned investors know that the best time to buy stocks is when most others are bearish and selling, and the best time to sell is when others are bullish and buying.
So now may be a time to consider selling. The American Association of Individual Investors found that 46 percent of its members were bullish in the week ended Jan. 9, The Wall Street Journal reports.
That’s up nearly 8 percentage points from a week earlier and well above the long-term average of 39 percent.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
Meanwhile, investors put more than $18 billion into stock mutual funds and exchange-traded funds (ETFs) in the week ended Jan. 9, according to Lipper. That represents the funds’ biggest weekly inflow since 2008.
“Investors must understand how poor their instincts really are,” The Journal states.
Some experts see these numbers as cause for concern.
"One of the things that makes me worried is that a lot of people are saying it's a good time to take on risk. When we all agree, it's generally not a healthy market," Lucas Turton, chief investment officer of Windham Capital Management, tells The Journal.
He says even his own firm is heavily weighted toward risk assets such as stocks.
How to act in this environment is a bit tricky. If you were thinking of buying stocks it may well be a good time to hold off. If you’re under 60 and investing for the long-term, there may be no need to sell stocks you already own.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
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