The bull is alive, for now.
Reallocate Between Sectors
Though it is almost impossible to predict when the market will reach its top, certified financial planner William Brancaccio of Rightirement Wealth Partners recommends that investors who think a correction isn't far off pull their money from vulnerable sectors.
"If we are approaching a market top and you want to be protective you would want to overweight defensive sectors," Brancaccio said. "Healthcare, Utilities and Consumer Staples would be a good starting point. Energy and Materials also tend to hold up during a market decline as well."
Prepare for the Inevitable Correction
The best thing you can do for your portfolio during the finale of a bull market is make sure it can endure the oncoming bear market, certified financial planner George Gagliardi of Coromandel Wealth Management said. While Gagliardi believes that a bear market might be a while off due to rising interest rates, he recommends that investors take precautions as a correction could come as soon as next month.
"Why be one of the hundreds of theatre patrons rushing to the one exit door when someone shouts 'Fire!'?" Gagliardi said. "Why not go stand next to the door to be the first one out, or better yet, leave early. This market may have a little upside left in it, but it definitely has a lot of downside, and anyone who thinks that they are fast enough to get out of the market quickly when things really head south is fooling themselves."
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Gagliardi recommends adding lower risk investments such as short term Treasury bonds to your portfolio to ensure that the market correction doesn't erase the gains you make over the last nine years.
Get Ready for Buying Opportunities
As you reduce your exposure to equities, certified financial planner Ruth Delaney advises investors to prepare themselves to buy.
"The end of a bull market is not the end of the world and may present some buying opportunities for younger, more risk tolerant investors," Delaney said.
Older investors who don't have enough time before retirement to wait out a market cycle might want to stick with lower risk investments however, Delaney said.
"Depending on your stage in life, it is always wise to re-evaluate your risk tolerance and your capacity for taking risk," Delaney said. "If you are very near retirement, then it may be time to reallocate your portfolio to lessen the impact of a bear market."