April 3, 2017

The stock market continues to rise. We’re hitting records regularly in this long-running bull market. But at some point, the party will end. And when it does, many portfolios could tumble.

It begs the question – when is it time to get out?

It’s similar to when you’re at a great New Year’s Eve party. If you stay too long and drink too much, you’ll pay for it with a hangover and maybe worse. Conversely, if you enjoy yourself in moderation and leave at a reasonable time, you’re ready and raring to go the next morning.

It seems to me that we’re at a great stock market party right now, but some strange things make it seem like it might be time to hit the road.

For instance, famous rapper and entrepreneur Jay Z now has an investment fund aimed at funding startup businesses. And over in Toronto, Tony Robbins and Pitbull held a gala last month saying they can change your life in one day by learning how to flip houses.

When musicians and celebrities get involved in markets, chaos ensues. Combine that with how expensive and overbought stocks are currently, and an exit might be in your best interest.

For those who do lock in gains by selling, keep in mind that it doesn’t have to happen all at once. If you decide you’re out, it can be done gradually. For example, if 60 percent of your portfolio is stocks, consider dialing that back to 30 percent over the course of a year.

People tend do things all at once. But it’s best to be safe and keep market moves small.