Should You Sell Your Stocks Right Now? Here's What a Century's Worth of History Suggests.

The forerunner of today's S&P 500 (SNPINDEX: ^GSPC) goes back to 1926, when the S&P 90 was created as a stock market index. It was changed to 500 companies in 1957, and as of this year, there's a century's worth of data to inform investors about historical trends.

That small start 100 years ago preceded the worst stock market crash in U.S. history, but a century later, the index is thriving, even though it's had its ups and downs over the decades.

Is there eventually going to be another down? Most certainly. Should you sell your stocks beforehand? Like most things in life, it depends. Here's what you need to know.

The S&P 500 is at record levels

The S&P 500 is up 13% this year and hit its most recent record on Oct. 6. If it remains this way by the end of the year, it will be the fourth year in a row with double-digit gains.

Image source: Getty Images.

Many of those gains are due to the massive tech companies that anchor the index. It's weighted, which means that the largest stocks by market cap account for the most weight. Nvidia, Apple, Microsoft, Amazon, and Alphabet are its top five stocks by weight, and there isn't a non-artificial intelligence (AI) stock in the top 10. 39.7% of the index is concentrated in tech stocks, which means it's highly exposed to changes in AI and the tech sector.

Today's enthusiasm for AI stocks is to some degree propping up the rest of the market, but the economy as a whole has been robust despite inflation. Companies have been reporting strong growth, leading to confidence in their stocks. However, prices are outpacing growth, leading to an expensive market.

Should you sell before the fall?

There are signs that a crash could potentially happen soon. The CAPE ratio, which measures the average 10-year adjusted price-to-earnings (P/E) ratio, is at its second-highest level ever at almost 41. When it reached a record of 44 in 2000, the market crashed. It didn't reach its previous high until seven years later.

The AI build-out is eerily reminiscent of the dot-com bubble at that time. While the S&P 500 is reaching highs, and with the prospect of a fall, you might be tempted to sell your stocks and pocket your gains. But that's a flawed argument.

First, no one knows when the crash is coming. There could be another year, or more, before it happens. If you sell now, you'll lose the chance to see your stocks continue to compound. Even if the market crashes, selling now means you miss the chance to see your stocks rebound and go even higher. As the saying goes, time in, not timing, the market is what matters.

Researchers at Capital Group found that over a 20-year period ended on Dec. 31, 2025, which includes the mortgage crisis, it didn't make a major difference whether you invested at the high or the low. An investor who bought stocks at the best time each year (the market low) and a different investor who bought each year at the worst time (the market high) both did well. The difference between their annualized gains over 20 years was two percentage points -- 14.65% versus 12.64%. Since you don't know the highs and lows, if you stay in the market, you'll come out ahead.

There are two caveats I would add. One, if you're retired or might need your funds in the near future, then it does make sense to sell some stocks today. Whenever the crash comes, you won't know how long it will last, and you don't want to sell at a low.

Two, if some of your stocks have grown to take up too much of your portfolio, you should sell some stock now to rebalance your portfolio. That way, you can pocket some gains today, make sure you're diversified properly, and still have some cash left over to pick up some bargains whenever a crash does come.

Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.