How do you overcome waiting to buy and waiting to sell?

[paynointerest]

I'm one of those people who lived through the crash in 2008, fortunately I was in my 30s and just starting a career and did not have much invested.  But, what I did have invested in my Roth, I sold and then was hesitant  to put back in because I kept thinking prices would go lower.  In hindsight, if I would have left the $$ in the S&P fund I had all my money in and just added to it, I would have a LOT more money in my Roth.

Here we are in 2018 and stocks are the highest they have ever been.  I've got about 45% of my money in equities, 35% in bonds, and rest in cash waiting for buying opportunities.  At my age (45), job stability, and earning power, I think I should be in 85% equities, 10% bonds, and 5% cash.  I don't want to jump in now because the markets seem really high -- so how do you pull the trigger and not worry about it when stocks go down?  Can they really keep going up forever? 

My other question is how do you know when to sell a stock that begins to lose value?  I've held on to 5 stocks that will never recover (a couple are penny stocks now) and it can't pull the trigger because it stinks to know I lost so much money.  That is one reason I know for me, Index and ETF funds are better...I don't want the responsibility of tracking individual stocks.  I want to focus my time on doing my job well and increasing my earning potential.

[midjd]

Without a crystal ball, you can never really know whether the market will continue to go up. But if you look at any of the major indexes, the long-term trend has always been upward. (I tell myself that if we end up in a death spiral and the S&P declines for the next 40 years, a lot of people will be hurting far more than I am.)

There's also really no way to predict whether the market will fall by 5% the day after you put in a big contribution, but if you're investing for the long term, that initial 5% drop really doesn't much matter. There have been some studies (that I am too lazy to Google, but have been cited here before) that show the average rate of return for lump sum investing exceeds that of dollar-cost averaging almost every time. This implies that it's usually better to get the money in sooner rather than later, regardless of current market price, since the long-term trend is always up.

I have exceedingly bad timing when it comes to investing, and it took me a long time to figure that out. I try not to time my contributions anymore. Anecdotally, I can think of at least half a dozen times over the past few years when I've thought "the market really seems high, maybe I should wait for a drop before I put in my IRA money" (but ignore that voice and put in my contributions anyway). Looking at it today, even with the fluctuations over the past couple of months, each index is far higher now than it was at any of those points. I'm guessing if you put in a lump sum today, in 5 years you'll be surprised at how "low" today's market is.

I've held on to 5 stocks that will never recover (a couple are penny stocks now) and it can't pull the trigger because it stinks to know I lost so much money.

If they're never going to recover, you've already lost that money and are losing more by keeping it tied up in a non-appreciating asset. Pull that trigger! (I had to be talked off that ledge a few months ago myself, was still holding onto some GE stock I'd taken about a 45% loss on... glad I finally sold, since it's even lower now than it was then!)

[paynointerest]

Thank you all for your responses. I must not have been clear in my earlier post.  I did not gamble with Penny Stocks.  The stocks, at the time I bought them were energy stocks that were doing very well, then the energy market tanked and I thought it would turn around.  Now, some of the single company stocks that were in the $30-$40 range are now penny stocks.  I definitely know better than to play around trying to day trade penny stocks.

I will bite the bullet and sell all my losers and put that money into a broad based ETF.  I may go with a dividend yield fund like VIG or VYM.

thanks again for getting me out of my "fear of losing money" mode and getting my mind set on the path to investing with the mindset of making money in the future.