Fearing a bubble? Five worst investing mistakes

Every market pundit has an opinion on whether the market is now at or near a bubble. And after the recent bout of volatility, triggered by a resurgent and scary narrative about a "slowing global economy," investors who have been in on the six-year bull market run would be right to question the profits they are sitting on.

But can you really trust anyone when it comes to the bubble question, whether it's a talking head on TV or your "brother-in-law's best friend," the million-dollar broker with "better" information? Just remember, market pundits and even professional investors are driven to some extent by their emotional makeup, just like the average Joe is. Ask an eternal optimist from the Wharton School, and the Dow probably still has room to move up. Ask a Mr. Doomsday from New York, and one should always be ready to head into the gold bunker.

Getty Images

Are we in an "everything bubble?" That's been suggested by some, including the reasonable New York Times market columnist Neil Irwin. Irwin argued that every single asset was overpriced by historical standards, as of the summer. The "everything bubble" is a catchy phrase, no doubt. But it didn't take much for Sam Stovall, S&P Capital IQ equity analyst, to counter that he sees no sign of any such dynamic, based on just a few data points from the equity benchmark most important to U.S.-based investors, the S&P 500 Index. S&P 500 stock are trading at a discount to the median over the past quarter-century, as well as at a discount since 1948 on an inflation-adjusted basis, according to S&P Capital IQ data.

A Multiple of Multiples
P/E Ratios
P/E Ratio on Trailing EPS (Sept '14E)17.218.4
Median Trailing P/E Since 198817.419.4
% Prem./(Disc.) To Avg. Since 1988(0.9)(5.3)
P/E Ratio on 2014E EPS16.917.8
P/E Ratio on 2015E EPS15.414.7

So it might be best for investors to not think in terms of a bubble at all, but when the broader markets are typified by jitters, we've we know that's easier said than done. So we've gathered some of the biggest mistakes investors make at a market top, so you can avoid following in their footsteps.

Read MoreAvoid these 15 investments and you'll do fine: Advisor

And remember, selling stocks is in some respects harder than buying them.

"When you sell, you have to be right—twice," said Tim Maurer, director of personal finance at the BAM Alliance and a CNBC Financial Advisor Council member. "Not only do you have to sell at an optimal time, you also have had to buy at the right time, and since hordes of evidence demonstrate that it's extremely difficult to do one and nearly impossible to do both, why not just control what you can?" Maurer said.

Here is what you can control broken down into five thoughts on investing.

1. Stop thinking there is such a thing as a top or bottom.

Steve Allen | Stockbyte | Getty Images

"If you're trying to guess the top of a market, you've ceased to invest and have begun to gamble," Maurer said. "The house always wins."

Mike Loewengart, director of investment strategy at E*Trade Financial, agreed, saying, "You won't be able to do it."

Read More5 advisor traits women value most

So what does he suggest? "You need to adopt a long-term point of view and focus on keeping your portfolio aligned with your goals through a variety of market conditions, and levels, both the tops and the bottoms," Lowewengart said. "An effective way to do this is through periodic rebalancing back to your target allocation."

That means taking profits off the table, regardless of whether the bulls or bears are currently winning the pundit argument. And that leads directly into the second mistake ...

2. Don't keep your winners.

Sell button
Mfto | Getty Images

If you are thinking about taking some profits off the table in profitable investments, then you're already too late: You should have already started to do it.

"One of the biggest mistakes I see is that investors often try to squeeze every nickel of profit out of an investment," said Mitch Goldberg, president of financial advisory firm ClientFirst Strategy. "If you do that, you're most likely to just give back gains."

So take a little off the table as your investment rises in value and use the proceeds to invest in something that you'd want to own more of, or something else that may potentially add diversification to your portfolio. "There is a big difference between being 'up' on paper and having real cash in your account from taking a realized gain," Goldberg said. "Even if you pop one over the fence, you still have to round all the bases for the scoreboard to change."

Read MoreWhat's more important than buying stocks? Selling them

And here's the flip side of this argument. "Don't just focus on what to buy, focus on what not to buy," E*Trade Financial's Loewengart said.

"Many times the market sends strong signals about the overvalued sectors that you should avoid," he added. "You should apply this lens to your own portfolio to weed out those assets that are now pricey." Not the whole market, no "everything bubble" but individual stocks or sectors from within your own portfolio.

Which leads directly to the third mistake ...

3. Don't 'go to cash' the wrong way.

Cash in jacket pocket money
photoshkolnik | Getty Images

Investors find out what a mistake trying to time the market is when they go to cash in a panic.

"It's OK for a professional trader to go to cash, but these guys do this for a living," said Goldberg at ClientFirst Strategy. "For my clients, managing investment accounts is akin to an accordion; the various asset classes of cash, fixed income and equity, at the margin, are in a state of expanding and shrinking depending on how much various the account holdings rise and fall.

"This is a very far cry from going into all cash, regardless of stock market conditions," he added, noting that a way to avoid this panic scenario is to buy stocks in companies that investors would be comfortable holding even when they're down—the ones "we full well expect to be around for many, many years to come."

Here's a recent example from the market's most well-known investor. Warren Buffett has in the past few years invested billions in Exxon Mobil and IBM. Both have disappointed since Buffett made his investment. Do you think Buffett is biting his nails?

Read MoreWhy Buffett is buying energy stocks again

"This is the biggest mistake investors make," Loewengart at E*Trade Financial said. Referring to his advice to sell positions that have outsized gains, Loewengart added that "you should not keep all your proceeds in cash.

"It should be deployed back into the market, through the purchase of assets with more attractive valuations," he said. "Once you adopt this perspective, market volatility becomes an opportunity."

That's a better "trader-like" thought process to invoke than going to cash in a panic. And not being swayed by the masses leads directly to the next big mistake ...

4. Too much focus on market measures will turn you into a sheep.

Chart up growth
David Gunn | E+ | Getty Images

Even when the Dow Jones Industrial Average bottomed in March of 2009 in 6,000 point range, it only spent a few sessions in that territory. When the Dow topped in 2007 in the 14,000 point range, it only closed at that level a few times. Every single bear market has been followed by a new record high in stocks; every new high in stocks has eventually been followed by a big retreat.

Here's the point: If you were willing to take some realized gains along the way to Dow 14,000 back then, you would have had ample opportunity to reinvest on the way down to the 6,000 point range.

Read MoreTake stock of your estate plan

"This would have not only helped you to potentially mitigate a decline in the value of your portfolio, it would have helped you to potentially recover more quickly," Goldberg at ClientFirst Strategy said. Or in other words, less time climbing out of a hole and more time above ground with a head of steam.

It might also be helpful—though it sounds like market heresy—to stop thinking in terms of calendar returns. Goldberg thinks that when investors focus less on index returns they can do better. "My stocks don't march to the calendar. What they really follow are two-fold; waiting for results of corporate management activities to work out and for the investor community to recognize those results," he said. "Changing the calendar from December 31 to January 1 is meaningless if you are waiting for your investments to deliver upon your expectations."

5. Don't think it's easy just because it has been easy.

Vacation relaxing rowboat
Caiaimage | Paul Bradbury | Riser | Getty Images

Your Wealth: Weekly advice on managing your money

Sign up to get Your Wealth

Please enter a valid email address
Get this delivered to your inbox, and more info about about our products and service. Privacy Policy.

After five years of a non-stop market run—87 percent for the S&P 500 and 78 percent for the Dow—anyone can "do this," right? Especially with the availability of online trading platforms and low-cost exchange-traded funds. It's time to become a do-it-yourself investor and stop paying those fees to advisors!

The question, though, is whether being a do-it-yourself investor will make you a better investor. Being able to execute a stock trade in less than a second or choose from more than 50 investing platforms is no replacement for investment knowledge and an investing process. This is especially important if and when the market cycle does turn, and investors are forced to figured out what to do with stocks that have run up a lot.

Read MoreAlternatives add diversity, cut risk

Ask yourself: Just because the investment tools exist, do you have the tools to manage that scenario?

Here's the good part: Investing technology provides a snapshot view of your portfolio and immediate control, things that were previously only reserved for very few institutional or high-net-worth investors. But that's not the same as investing being easy. "Far from it," E*Trade Financial's Loewengart said. "It means you need the discipline not to react emotionally and to keep your portfolio on the right track—one defined by targeted allocation adjusted for your risk tolerance."

Don't let a bull market lull you into a false sense of confidence.