With US domestic stock markets recently hitting all-time highs, buoyed by strong corporate earnings, Big Tech momentum, tax policy changes, and whisperings of Fed rate cuts, many investors wonder: “What should I do now?”
When markets are strong, it’s natural to feel excited by portfolio growth. But record highs are also an excellent opportunity to pause, review your financial plan, and reestablish whether your portfolio is still aligned with your long-term goals.
Here are four strategies to consider when markets reach new highs:
Rebalance to Manage Risk
As markets rise, growth-focused equities may grow to an overweight position in your portfolio, leaving you with more risk than intended. Portfolio Rebalancing can bring your portfolio back to its target long-term allocation while reducing overexposure to equities and underexposure to more conservative holdings. Often, this process can be done using tax-efficient retirement accounts, minimizing tax costs. At Glassman Wealth, we proactively monitor client portfolios for rebalancing opportunities, keeping our clients informed about the process and potential tax ramifications.
Be Strategic About Taxes
Strong markets often mean larger gains in your portfolio, so being intentional about tax planning strategies can help. A few examples:
- Spreading capital gains over multiple years to manage taxes
- Donating appreciated stock instead of cash to avoid capital gains tax
- Using a donor-advised fund to optimize charitable deductions and support meaningful causes, while also helping achieve long-term legacy goals
Plan for Upcoming Cash Needs
Whether you are planning a home renovation, have upcoming education expenses, or take regular distributions from your portfolio, consider setting aside funds while the market is strong. Moving that money into safer positions like money market funds or government bonds can provide stability and prevent panic-selling if markets pull back.
Revisit Your Long-Term Goals
Market highs can create both excitement and anxiety. Some investors may feel sure that trends will continue and want to increase their allocation to equities, while others may predict an imminent downturn and want to move into more conservative investments. Instead of reacting to short-term swings, use this time to review your financial plan:
- Am I comfortable with my current level of risk?
- Do I have enough cash set aside for near-term needs?
- Does my portfolio reflect my long-term goals?
Staying focused on your plan—rather than short-term market predictions—usually leads to a better outcome.
Final Thoughts
A market high is exciting, but also a valuable checkpoint. By rebalancing risk, planning ahead for taxes and cash needs, and confirming your goals, you can stay positioned for long-term success and provide peace of mind.
At Glassman Wealth Services, our fiduciary advisors help clients navigate both bull and bear markets with a personal touch. If you’re wondering how to adjust your plan in today’s market, please contact your advisory team.
