Markets and most investors have had terrific returns this year so far, but what should we do now?
FundX Chief Investment Strategist Jason Browne gave his take on the markets on CNBC’s 'The Closing Bell.'
“When valuations get as high as they are, and everyone feels this good, two things tend to happen,” Jason explained. “One is volatility does tend to come back into the market, and being able to stay invested in that environment is really important. The other is that your upside may become a little more limited.”
So how can you weather changing markets? Jason shared four practical tips on CNBC.
4 Ways to Prepare for Changing Markets
#1 – Look for ways to dial back risk; don’t sell out of the market entirely
“If the market keeps going up, you don’t want to get stuck on the sidelines,” Jason said.
#2 – Rebalance your allocation to stocks and bonds
Given this year’s good gains, your stock allocation may be higher than you expect, and rebalancing “offers the ability to take advantage of new opportunities,” Jason said.
#3 – Consider balanced funds, which own both stocks and bonds
“I see balanced funds less as looking for income and more as looking for things that aren’t going to go down as much in a down market,” Jason explained.
#4 – Focus on diversified funds, not sector funds
“Move more of your money from the hot sectors back into some diversified plays so that you can weather potential changes in the market environment,” Jason said.