When stocks hit highs, is it too late to buy?

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: Is it too late to buy stocks with them at record highs?

A: When stocks are on the way up or hitting record highs, investors don't like the feeling that they're paying too much. But when stocks are in free fall and hitting lows,investors are afraid they might fall even further.

That's the dilemma of the market timer. If you're one of the people who have been sitting on the sidelines all year and missed out on the stock market's impressive move this year, you certainly can understand how costly trying to time the market, and being wrong, can be.

Some investors have all sorts of ways they say they can tell when the market is too expensive -- or too cheap. Some might be effective, but more times than not, these market timers are missing rallies and riding stocks down too far.

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Rather than trying to second guess where the market is headed, which is essentially impossible,it's best to focus on the amount of risk you can handle and how much money you have to invest. Those are two variables that you can accurately forecast.

Once you decide on how much risk you can stomach, you can then create a balanced portfolio designed match that risk appetite. If the portfolio is balanced, and contains bonds and stocks, chances are that if you're patient you'll be satisfied with the long-term returns.