What Do I Do Now?

As I write this article in late December 2025, the S&P 500 just made another all-time high for the 39th time this year and is up 18.75% for the year. This follows 2024 and 2023 when the S&P 500 was up 25.02% and 26.29% respectively. As I have been talking to many clients on our year-end strategy calls, two nagging extremely but logical questions have come up: 1) is the market in a bubble? and 2) what do I do now?

To put new market highs in context, as of December 29, 2025, there have been 955 new market highs for the S&P 500 since 1975 with over 7% of the S&P 500 trading days closing at a new high. But these facts do not change the fact that investors of all types are nervous and do not want to make mistakes or lose money. This is where psychology gets in the way of our success. Many feel the overwhelming need to do something different to protect themselves. They feel that they must take action.

There are three common mistakes investors make during these periods.

The first mistake is that they try to time the market, which rarely works out. Logically, it makes all the sense in the world. The thought process is that the market is at an all-time high, let’s sell and buy back when the market corrects or goes down. In reality the execution is extremely difficult. You must be right twice, when to get out, and when to get back in. In taxable accounts you must also take into consideration potential capital gains taxes that might be owed. If you miss just a few good days, the market could erode your long-term returns dramatically. Compounding is a much stronger component of long-term returns. One of the biggest mistakes individual investors can make is to interrupt the enormous power of compounding of money on a long-term investment plan.

The second mistake that people make is buying what they wish they owned. They look back and think they should buy something because it has gone up in value significantly. The thought is that since it went up a large amount, the stock’s success will continue. This is also known as FOMO or Fear of Missing Out. Chasing yesterday’s winners can be catastrophic to a long-term investment plan.

The third mistake is that many people feel that since the market has done well for several years that the market is in a bubble and is going to crash. There are definitely times when the market does crash, and it is not unusual for the market to have 5-10-20% corrections each year. But remember, every time the S&P 500 has had a correction, it has always gone back to a new all-time high. Lasting major market corrections or bear markets are usually caused by something significantly bigger than the fact that it has gone up three years in a row, such as a recession, the Covid pandemic, or the Global Financial Crisis of 2008-2009. It is also during these terrible financial and economic times that the seeds of future new market highs are sown.

OK, you now know the three key mistakes to avoid. So, what should you do? How do you help ensure that you continue to move forward towards financial success and financial independence?

It is time to go back to the basics.

1) Make sure you update your financial plan so that it reflects your current dreams, aspirations, asset levels, cash flow needs and risk appetite. This plan should be time specific, dollar specific and reflect your current economic realities. The time and money specific financial plan is the bedrock and foundation to continued financial success. It is our experience that many people spend more time planning their vacations than they do planning their financial future. There is an old idiom that says, “If you fail to plan, you should plan to fail.” So if you do not have a plan, complete one ASAP!

2) You need to keep saving and investing your savings based on your risk appetite and based on the asset allocation that your financial plan recommends. An effective way to invest is by utilizing a consistent investment program known as “dollar-cost averaging” (“DCA”). DCA is an investment strategy where you invest a fixed amount of funds at regular intervals over time to reduce the risk of bad timing. This helps reduce some of the behavioral pitfalls of investing, while continuing to build wealth as the market continues to march forward towards future new highs.

3) And lastly, it is essential to recognize that money and specifically market volatility often add additional stress to our lives. I have experienced all too often that these stresses can lead to poor investor decisions. It is important to remember that newsworthy stories are not always economic events that have negative long-term effects on the markets and personal financial plans. It can be emotionally difficult to invest during these times, which can paralyze investors at the exact time that they should be investing.

These three basics require patience, discipline and consistency. Trillions of dollars of wealth have been created by the financial markets over time. Stay disciplined, enjoy the successes of the market, embrace volatility and expect the market to eventually go back to new highs, while remembering how unpredictable the market can be. Truth be told, very few predicted the returns for the S&P 500 in 2025, and I cannot wait to see all the crazy for 2026.

Disclosure: Next Level Private LLC is a registered investment advisor. This commentary is for informational and educational purposes only. Next Level Private renders investment advice on a personalized basis, only after gaining a full understanding of a client’s goals and financial situation. Please contact us with any questions you may have. The Publisher refers to all companies that contribute articles as “Expert Contributors”.   Next Level Private pays an advertising fee to the Publisher to have the right to contribute articles.