It’s shoulda, coulda, woulda time in the stock market. “I should have listened to reason a year ago, when I could have sold my Janus Mercury Fund shares for almost twice what they’re worth today,” a voice in your head declares. “I would have done that, too, if I had just recognized what was plain as day that the boom in new-age growth stocks had gone to ridiculous extremes. Shame on me if I ever make that mistake again.”

So goes the refrain for all too many investors, now that the Internet boom in stocks and stock funds has given way to a relentless bear market.

I suggest we put away the cat-o’-nine tails. This flagellation threatens to compound the error far beyond the original “mistake.”

Yes, the wise ones warned us. In the midst of the bull-market frenzy no less a paragon than Warren Buffett sounded the alarm that a “casino” mentality had gripped stocks.

But don’t let your memory play tricks on you. If you’d heeded all the voices of caution, you would never have had a chance to sell at the top of the market in early 2000. You’d have been out of stocks years before that.

Going too fast

Way back in the 1997 annual report of his Berkshire Hathaway Inc., Buffett wrote, “Prices are high for both businesses and stocks. That does not mean that the prices of either will fall we have absolutely no view on that matter but it does mean that we get relatively little in prospective earnings when we commit fresh money.”

Or suppose we consulted Alan Greenspan, the esteemed chairman of the Federal Reserve Board, who first raised the specter of “irrational exuberance” among stock market investors in December 1996, when the market advance still had more than three years left to run.

If you keep it in that context, the recent nosedive is only part of the story for investments like Janus Mercury, which I picked as a handy example because I happen to have a (shrinking) chunk of my own money there.

True enough, the fund has fallen 46 percent in the last 12 months. Yet even after that drubbing, it has posted an annual return of 19 percent over the past five years to rank among the top 3 percent of all growth funds, according to Bloomberg data. In the last three years it has gained 74 percent, more than tripling the 20 percent gain of the Standard & Poor’s 500 Index.

When the Nasdaq Composite Index slumped below 2000 for the first time in more than two years, that popular new-economy gauge was still 50 percent higher than where it stood in December 1996. So the bears haven’t become sole custodians of the truth just yet.

The next time you hear an “I told you so,” ask, “And how long have you been saying it?” Point out that any true value-conscious purist who insisted on selling stocks whenever the Standard & Poor’s 500 Index surpassed a “normal” price-earnings multiple of, say, 15 would have cashed out in late 1990 and never gotten back in.

Cost of caution

Think that through before you vow to avoid stocks from now on except when it appears safe and sensible to be in the market. That kind of resolve leads you to a lifetime position in certificates of deposit which keep you safe from bear markets but are almost certain to short-change you in the long run if growth of your savings is your most important objective.

In this year’s annual letter to shareholders, Buffett offers the sobering thought that bargains are still scarce in the stock market. “The long-term prospect for equities in general is far from exciting,” he said.

Notice, though, that Buffett and Berkshire aren’t abandoning their investments in what he describes as “some excellent businesses,” even if most of their stocks are “fully priced.” To follow his example, you’d rein in your expectations but stay in the game. I think that’s what I’ll do with my Janus Mercury investment.

Chet Currier is a columnist for Bloomberg News.