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Here are moves investors can make when the market is soaring, advisors say

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It was a very good year for the stock market.

The benchmark S&P 500 ended the year with a 24.2% gain, the Dow Jones Industrial Average rose more than a 13% this year and and the Nasdaq soared 43%.

An investor who had $500,000 in the S&P 500 index around 12 months ago, would have roughly $630,000 now, according to an analysis by Morningstar Direct.

“It is exciting to see healthy, positive returns,” said certified financial planner Marguerita Cheng, the CEO of Blue Ocean Global Wealth.

What moves should investors make when the market is soaring? Here’s some advice from Cheng and other members of CNBC’s Advisor Council.

‘Don’t chase the market’

Although many investors are seeing their portfolios at all-time highs, they should typically avoid cashing out because of the rally, Cheng said.

“I advise clients to remember that the time they are in the market is more important than trying to time the market,” Cheng said.

Indeed, over the last 20 or so years, the S&P 500 produced an average annual return of around 6%. But if you missed the 20 best days in the market over that time span by trying to time things to your advantage, your return would shrivel to 0.1%, according to an analysis by Charles Schwab.

“The market keeps going up, so even though it’s at a high, it might be even higher in the future,” said CFP Sophia Bera Daigle, founder of Gen Y Planning in Austin, Texas.

Yet the recent rally doesn’t mean you should suddenly pour more money into your investments, either, said Ivory Johnson, a CFP and founder of Delancey Wealth Management in Washington, D.C.

“Don’t chase the market,” Johnson said. “Often times retail investors get excessively bullish after the move has already happened, and turn a win into a loss.”

Afraid that the good times will give way to a recession? It may be helpful to zoom out.

Dramatic ups and downs aside, history reveals the market reliably gives…

2023-12-31 08:30:00

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