The ASX 200 (ASX: XJO) is likely to break another all-time record today or sometime this week as investor confidence returns about the share market.
What should investors do? Well, the obvious thing to do is celebrate! Breaking (good) records is a positive thing, records are meant to be broken. Population growth and inflation alone should see profit and share prices climb over time.
Should investors worry?
Share markets usually break records when there isn't much to worry about. The trade war could be coming to an end with the US and China keen to get something done. The Brexit stalemate looks as though it will come to an end with Boris Johnson's Conservatives winning a big majority.
Of course, it's not like shares are going to keep rising every single day and keep breaking records. I wouldn't be at all surprised if during 2020 we see both a new all-time record and a decline of more than 10%.Volatility will continue
We are getting closer to a recession each day, but we're also getting closer to the next recovery and the next boom.
Should you sell?
One of the most used phrases about investing is "buy low, sell high". Well, we're certainly at a high. You can't broke selling things at a profit.
But, if you decide to sell you have to pay brokerage and you'll probably have to pay a bit of tax on your capital gain as well.
Unless you think you have found a much better investment (after brokerage and tax), there's a good chance that it's better to stick with your current investment. Selling out of shares entirely could be a mistake – the market could keep rising.
But, if you're invested in a cyclical share that could see a downturn soon I'd consider selling some or all of those shares. For example, realistically iron ore is not going to stay at this level forever, so I'd consider selling something like Rio Tinto Limited (ASX: RIO).
Should you buy?
If you're buying index investments like BetaShares Australia 200 ETF (ASX: A200) then I'd be cautious about putting in a lot of new money today.
However, not all shares are trading at all-time highs. There are plenty of shares with attractive long-term futures that are nowhere near their highs like Webjet Limited (ASX: WEB), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Appen Ltd (ASX: APX).
