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Don't Sell This Bull Market Short

Several clients have asked me recently whether they should sell some stock funds. “Isn't the market too high?” they ask. No question, the market is richly priced today, although by some measures it’s not as expensive as many individual investors think. Moreover, valuation isn’t everything—in fact, as a market-timing strategy, it’s awful.

Let’s look at the factors supporting this market and then address the risks. Start with the breadth of the advance.

When investors are confident about stocks, they tend to spread their bets among a wide variety of stocks, including riskier small-company stocks and stocks that rise and fall with the economy’s ups and downs. On that score, the market looks very strong today. The current bull market advance has been quite broad, with most stocks participating.

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