The 'dumb' money is not so dumb

After yanking more than $150 billion from U.S. stock mutual funds last year, investors poured $8 billion back in last week.

By Lee Munson

There is a feeling out there by some in the financial media that small-time investors are getting back into the stock market at the worst possible time. They -- or 'them' -- think this is entirely predictable and repeatable mistake.

I get it: "them" are smart and 'you people' only make mistakes.

Let's look at what's really going on.

First things first: Who said this is the worst possible time to invest? It seems pretty good to me. The Federal Reserve's QE3 is still doing its thing, pushing investors to take more risk. Corporate profits are 35% higher than their peak during the last cycle. More people are getting jobs. Homes are selling at higher prices. Valuations seem okay.

So really, some say it's the wrong time only because stock prices are higher than they were last year. The thinking is that you shouldn't invest now because you could have bought stocks for less six months ago. That's not much of a reason.

Yes, people should have managed their risk more effectively going into the 2008 meltdown. Yes, they sold at the wrong time. Yes, they realized they had no plan while standing on the ledge. You would back off too if you realized you didn't do your homework and were totally screwed

Let me give you some 'advice'. I don't care if you were stupid and switched to cash because of last year's fiscal cliff nonsense – no judgments from me. I don't care if you freaked out and dumped money in bonds funds over the past few years – you did well and got paid.

I do care that you move forward today. Don't let armchair financial journalists get you off your dime. I am a professional wealth manager for everyday multi-millionaires, and a few rich people too. I am putting fresh cash to work today.

Related: Are we in the last stage of the bull market?

Here is how.

Get a financial plan. I do them all the time. The trick is to match the portfolio with the plan. The plan will dictate what you need to do. Stop asking inane questions like 'is this right time to blah, blah, blah'. It is always the right time to have a balanced, risk-managed portfolio that is hand tailored to your needs. Do you need to be fully invested in the stock market or in cash? How does that further your financial goals? A real plan will tell you what kind of risk and return you need to take to meet your financial goals. This way, you never guess how much you should have in stocks or bonds or Ponzi schemes -- your plan does the work for you.

You can still watch the news and be addicted to financial blogs. It's simply fun to watch the world through the manic lens of media. I know, I am part of the problem. Just remember that your portfolio should have the parental locks you would assign a 4-year old. This way you can avoid liberals or conservatives in our politically driven markets to sway your opinion. Don't' you want to tell everyone to piss off? I know I do.

Lee Munson is the founder and CIO of Portfolio, LLC. The opinions expressed in this commentary are solely his.