About this episode
Is the stock market in cappuccino mode? You bet—there’s talk of froth everywhere, and a lot of people are getting nervous. The Wall Street Journal’s buzzing about how individual investors are turning bearish, scanning the horizon for signs of market froth—those bubbly, overinflated prices that could pop any minute. But here’s the reality: more often than not, there’s going to be some froth somewhere in the market. Prices get ahead of themselves—it happens. Things like the tech sector can start looking a little too foamy for comfort. So, what do you do? Here at Watchdog on Wall Street, we’ve been hammering this home for years: you’re not going to go poor taking a profit. That’s right—don’t let greed keep you hanging on for ‘just a little more.’ A lot of folks out there are terrified to sell because they think, ‘Oh, I can make so much more; this stock’s going higher!’ But do you know that? Because I sure don’t—no one does. I might have a position in my portfolio that’s shot up an extraordinary amount. I still love the company, think it’s a great business with solid growth ahead, but you don’t know what’s lurking around the corner. That’s why you take some money off the table. That’s why you reallocate those gains into other parts of your portfolio that aren’t so frothy—safer bets, less bubbly sectors. You see these pundits on TV, strutting around with their arrogance, acting like they’ve got the future all figured out? They don’t know squat. Nobody does. The best you can do is make an educated guess, and a good portfolio manager hedges their bets.So, if your positions—like maybe in that frothy tech sector—are getting a little too hot, too bubbly, do yourself a favor: take some money off the table, reallocate, and move on. Don’t gamble with your future. www.watchdogonwallstreet.com