Here’s the thing about the stock market hitting all-time highs: it happens a lot. Like, way more often than people think. Yet every time it does, the panic brigade shows up with their doomsday predictions and their “should I sell everything?” energy. According to Erik Smolinski, a full-time options trader who actually beats the S&P 500 (not just talks about it), that’s exactly the wrong move.
“The market spends most of its time at all-time highs,” Smolinski told Business Insider. “The train is never late.” Translation: if you’re constantly selling whenever stocks hit records, you’re basically guaranteeing you’ll miss the gains that actually make you money.
The Paradox of Being Right About Risk
Here’s where it gets interesting. The market is in a weird place right now. Stocks are near records while the Iran war is happening, inflation is doing weird things, and the Federal Reserve is basically playing 4D chess with interest rates. So Smolinski isn’t saying “ignore everything and buy the dip.” He’s saying something more nuanced: don’t panic-sell just because the pundits are screaming about a collapse.
“If you get too hesitant on risk, what are you doing here?” he said. “Equity markets are for people looking for risk. That’s how you make money.” Fair point. If you can’t stomach volatility, bonds exist.
The Real Signal Worth Watching
So what should you actually pay attention to? Bond yields—but not in the way you think. Smolinski doesn’t care about hitting some magic round number like 5%. He cares about speed. A slow grind toward higher yields on strong economic growth? Totally different animal than a fast, chaotic spike. “A 40-to-50-basis-point move in a couple of weeks tells me far more than the round number does,” he explained. “That velocity is what breaks equities.”
He’s also watching real yields (adjusted for inflation), not just nominal ones. A 5% Treasury yield means something completely different when inflation is 2% versus 4%. And here’s the kicker: he’s checking what’s driving the yield moves. Growth-driven selloffs? Manageable. Inflation re-accelerating or deficit worries? That’s the stuff that historically gets ugly for stocks.
What You Should Actually Do
Smolinski’s advice for regular investors is refreshingly practical: don’t dump your portfolio, but do a portfolio audit. Make sure you’re not too concentrated in one stock, sector, or theme. Confirm you actually understand why you own each investment. Check that your asset allocation still matches your time horizon and risk tolerance.
The goal isn’t to predict what the Fed will do next—that’s a fool’s errand. It’s to understand your holdings well enough that you can hold them if things get choppy.
The Bottom Line
Record highs aren’t a reason to panic. But they are a good time to make sure your portfolio still makes sense. And maybe, just maybe, stop listening to the doomsayers and start listening to what the bond market is actually telling you.
