NEW YORK (MainStreet) — Speculation that the stock market is due for a correction has some investors concerned that the bull market might be ending soon.
While determining when the market is poised for a pullback can be a fool’s errand, investors should be prepared because “by any measure you want to look at it, we are close to the top of the market,” said Matthew Tuttle, CEO of Tuttle Tactical Management, based in Stamford, Conn.
“Investors who are prepared will be fine, but those who have come to believe ‘this time is different’ will get hurt like they always do,” he said. “This bull market will die slowly, but all bull markets eventually die.”
Avoid Making Predictions
Instead of trying to calculate when the pullback will occur, investors should either react to it when it does or start divesting their assets “once it starts to go down,” Tuttle said.
“Don't try to predict it,” he said. “The market timers’ hall of fame will always be empty. We are near the top, but the market can keep going up for awhile regardless of valuations.”
Since bull markets can not last forever, one option is to allocate your retirement funds to a tactical money manager or tactical ETF, Tuttle said. Even if you get back to even and “earn” all of your losses from a previous dip in the market, investors should not be complacent with large losses in their retirement funds.
Buy and hold aficionados will argue that the strategy works, because even though the market falls, it eventually comes back. That philosophy is a fallacy, since investors can easily lose half of their net worth, he said.