The Dow Jones recently closed at over 25,000 as the bull market continues what looks to be an endless ascent. The TSX at over 16,400 is also at an all-time high, and has many investors wondering how much longer these streaks can continue on for.
Hype is pushing a lot of valuations up, from cannabis stocks to Bitcoin, investors have been in a frenzy the past year. The danger is that a big market correction is overdue, and when it happens, it could get real ugly, real fast.
Investors that have earned strong returns may want to consider cashing out some of their investments while values are still high. The problem is that the hype might keep investors into thinking that the markets will continue to rise.
Although the U.S. has lowered corporate tax rates, which should help companies continue to grow, there are other factors that could bring the bears out.
There is a lot of instability in the world of U.S. politics with an investigation ongoing that could impact the presidency, as well as the threat of a potential conflict with North Korea. Investors hate uncertainty, and that’s what both of these issues create.
However, so far we’ve seen the stock markets largely ignore these concerns, but that won’t last forever. As tempting as it may be to stay invested, we may be reaching a peak, and investors need to be prepared for what might happen when things turn badly.
This doesn’t mean you should sell all of your stocks, but rebalancing your portfolio might be the best way to ensure that you minimize your exposure to market-related risks.