Recent market movements may have some investors wondering whether to take profits and run, or buy on the weak side. Stocks rebounded somewhat on Friday after a volatile morning. The Nasdaq Composite Index ended its losing streak on the 3rd and ended 0.13% higher. The S&P 500 ended almost flat, with the Dow Jones Industrial Average down 0.65%. The move followed Thursday’s decline, when all three indexes posted their worst one-day performance since Oct. 10. Mitchell Goldberg, president of Client First Strategies, said retail investors appeared to be divided on Friday. “The market buyers, the people who have been conditioned to buy the market for years, see this as an opportunity because many of the leaders have finally decided to leave,” he said. “Most investors are doing the opposite. They’re locking in profits after a strong rally.” Indeed, the market has hit record highs this year. Artificial intelligence-related technology companies have been leading the way, but have recently come under pressure from concerns about valuations and the Federal Reserve’s policy of cutting interest rates. On Friday, they regained some momentum. “Maybe it’s time for people to sharpen their pencils, stop trading based on headlines, and start focusing on investing,” said Mark Marek, chief investment officer at Siebert Financial. “A market like this is a wake-up call for all of us to make sure we stick to our plans.” Different Opportunities That’s exactly what investors should be doing, especially those who might invest their entire pay period in a retirement plan or investment account, Goldberg said. “Stay invested and maintain dollar-cost averaging, because dollar-cost averaging means you buy fewer stocks when stocks are rising and more stocks when they are falling,” he said. “Ultimately, these prices average out, which helps reduce volatility in the account.” But for those who are nearing a point in their lives when they are ready to change their allocation from 80% stocks and 20% bonds to 60/40, now may be a good time to consider such a move, he said. “There’s no reason for anyone to complain about this year so far. People have been doing pretty well,” he said. Kevin Simpson, founder and chief investment officer of Capital Wealth Planning, sees exits as a good opportunity to add to a good position for investors who are looking at a horizon of at least three to five years. However, he will reiterate that the market does not go up every day. “When you have the opportunity to buy things cheaply, it’s very wise to buy in small quantities,” he says. In fact, Simpson used this opportunity to buy more IBM stock. The market still treats IBM as if it were an old-school mainframe company, which he said is an outdated idea. IBM YTD Mountain IBM YTD YTD “At around 25 times forward earnings, you’re getting a high-yield, cash-rich, AI-powered name at a discount. And that’s more than can be said for most mega-cap tech companies at this point,” Simpson said. But there’s a difference between seizing an opportunity and timing the market, and investors should never do that, said Matthew Smart, director of financial planning and portfolio analysis at WWM Investments. “We think market declines in today’s environment can be taken advantage of if you have cash on hand and are willing to act opportunistically,” he said. He said nervous stocks could rebalance their portfolios and move into sectors that are less valued than tech stocks, such as consumer staples, health care and real estate. Diversification is key Individual investors who own single stocks should have locked in some profits when megacap AI stocks were rising and used the opportunity to reinvest in other areas of the market with higher value, Goldberg said. That could extend to other sectors such as consumer staples, health care and utilities, or it could mean looking at real estate, bonds and preferred stocks, he said. The bottom line is that investors should diversify. “While it won’t necessarily protect your portfolio from declining in an overall declining market, it can help reduce portfolio declines and help your portfolio recover more quickly,” Goldberg said. Jay Woods, chief market strategist at Freedom Capital Markets, thinks stocks are likely to move higher from here with a year-end rally. He said it will only be confirmed on Monday whether Friday’s rebound actually marked a significant reversal date. However, he noted that the market has risen for the 10th consecutive session on Monday. “Traders know this. They saw a buying opportunity and retailers followed suit,” Woods said. “This is very positive price action,” he added. “The opening[of the S&P on Friday]should be a new floor, and we’re going to focus on what matters next: Fed policy and Nvidia’s earnings.” The company is scheduled to report third-quarter results on Wednesday. Meanwhile, some frothy stocks in the quantum, crypto and nuclear sectors fell due to the sell-off, he noted. “The euphoric rallies in some areas have kind of stopped for now,” Woods said. “I think we’ll see another round of euphoria in 2026. That’s what happens in strong bull markets.” He expects the S&P 500 to reach $7,000, but he doesn’t know if it will end the year at that level. “We’re setting ourselves up for a good year-end rally because if we do well in the first eight, nine, 10 months, we tend to finish strong,” he said. “If NVIDIA gives us what we can expect, I think we can hit new highs.”
