Newsletter › #29
Stock Prices Are So High — Is It Still OK to Buy?
【What I've been up to】
Hi, Reader,
How was your week?
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If it blows your mind too after you try it, let me know!
Now, on to today's topic.
Stock prices are so high — is it still OK to buy?
Yesterday, May 25, 2026, Taiwan's stock index closed above 43,000, and 0050 (Taiwan's best-known index ETF) closed above NT$100. I posted a screenshot in the FIRE University Lounge, and one member replied: “0050 has broken 100 — now I'm hesitant to keep up my monthly investing.”
I asked him to watch Ray's interview with Nick Maggiulli.
In the interview, Nick explains that the core creed of his book Just Keep Buying is “keep buying diversified income-producing assets.” Here are the three parts of that idea:
The three parts of “just keep buying”
1. Keep buying: investors should keep buying assets over time, rather than waiting for a so-called pullback or trying to time the market. Nick shows with numbers that sticking with regular buying usually beats timing.
I have a friend who, when stocks plunged during the US–Iran war, sold his 0050 in the NT$70s, saying he'd buy back in when the price fell further. It then climbed all the way to NT$90 before he bought back in — there was never a lower price to buy at. “Buy low, sell high” is an ideal, not a rational plan.
2. Diversify: if you invest in a single stock or a single market (say, only Taiwan or only the US), your risk is too concentrated and your assets swing too much. Only by diversifying can you hold on through market cycles and black-swan events, and survive for the long run.
My asset allocation
My investments look like this:
- Taiwan stocks: 0050, about 50%.
- US: VT (global ETF) 10%, BND (bond ETF) 30%, NVDA 10%.
- Property: steadily collecting rent.
So whether stocks soar or crash, or the housing market rises and falls, I stay calm — because my assets are diversified.
3. Buy income-producing assets: assets that generate income.
That includes: stocks, property and bonds.
It doesn't include: gold or bitcoin. Nick isn't against holding them, but suggests keeping them small — no more than 5% of your assets.
Nick stresses that if you stick to these three principles, you can hold for the long run however the market moves — or fine-tune your weights and positions to manage risk — so the market never shakes you out.
How to overcome the psychological biases of investing
Even an expert like Nick has made moves that went against his own principles out of fear of a bubble. So he suggests these strategies to overcome our psychological biases:
The buy-the-dip trap
Many people hold cash waiting for a pullback because they fear a bubble, but Nick points out this is statistically inefficient:
- You may pay more: even when the pullback comes, prices may still be higher than the previous peak. If you'd waited in 2017 for a crash and finally bought at the bottom of the 2020 pandemic dip, you'd still have paid more than at the start of 2017.
- Buy now: historically, in most cases, investing everything at once earns more than spreading it out.
All at once, or bit by bit?
He gives an example in the interview: if you have 120,000 and either invest it all at once or spread it over 12 months, on average spreading it out returns about 4% less. So his advice is to invest whatever money you have all at once.
But he also admits this goes strongly against human nature; you need a very strong stomach to hold on.
So if you can accept 4% less in return in exchange for peace of mind and good sleep, spreading it out is fine.
I really agree with him here, because Morgan Housel makes a similar point in The Psychology of Money: even if you know rationally that investing all at once earns more, in the end human nature wins over reason.
As for my own strategy: I keep only a few months of living expenses on hand, and the rest of my spare money goes into BND, a bond ETF yielding about 3.x% a year. Then I'm slowly selling BND and switching into VT, planning to complete the move over a year.
So I'm gradually moving bonds into stocks. If the market falls, I buy a few more shares; if it rises, I keep selling bonds and buying stocks as planned.
That's my current strategy. It lets me sleep soundly every night, and whatever the market does, I benefit.
I hope this gives you some confidence and direction while the market is running hot.
One last reminder: if you invest in the whole market with regular monthly contributions, whatever happens, don't stop your contributions and don't take profits (unless you need the money).
Ten years from now, when you look back at today's prices, today's high will look like a low.
Wishing you well.
This week's episode
#74 | Not doing more, but doing what matters first (Four Thousand Weeks #2)
Pay yourself first with your best hours, limit work in progress, and resist the middling priorities that steal your life. Plus the paradox of choice.
Read the full show notes in English › (the episode is in Mandarin Chinese)
🍎Apple Podcasts
🎧Spotify
🎦YouTube
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That's it for this issue of the FIRE Life Weekly.
If you have any questions about the show or the newsletter,
just write to me at doug@firetw.com.
I look forward to hearing from you.
Have a lovely day,
and see you next time.
Doug