Tech stocks help fuel current bull market

stock valuations.”

Gus Faucher, chief economist at PNC Bank, Downtown, said continued improvement in the market is a signal that investors expect the economy to expand for at leastthe next six months or so.

“If you look at traditional measures like the priceearnings ratio [which looks at the ratio of stock prices to corporate profits] or the ratio of the S&P 500 to corporate profits, the market looks a little pricey right now, but not highly overvalued,” he said.

World events will play into the stability of the current bull run.

“It’s certainly possible that stock prices could fall 10 percent to 20 percent in the near term, particularly if Congress doesn’t pass corporate tax cuts or if there’s geopolitical turmoil,” Mr. Faucher said. “But I wouldn’t view a near-term correction as a signal of problems in the broader economy. And a near-term correction would be a buying opportunity.”

Based on earnings yield — a measure that the financial industry uses to compare how expensive stocks are to bonds — investors regard stocks as being cheaper than bonds at this point.

The 10-year Treasury bill is currently yielding about 2.4 percent. The earnings yield is much higher on stocks right now.

While there is no sounding alarm for an imminent plunge in stock market prices, financial advisers are placing a high priority on risk management.

“We are not bracing for an imminent correction, but we do recognize one will come,” said Ben Greenfeld, chief investment officer at Waldron Wealth Management in Bridgeville.

“Based on historical patterns, we are overdue. Our approach is to support and ensure our clients’ longterm goals aren’t impacted by market fluctuations,” he said.

He had some advice for investors.

“Right now, it’s important to not get greedy in the market,” Mr. Greenfeld said. “Do some natural rebalancing and make certain you have appropriate high quality short-term fixed income to fund your cash flow needs in the event of amarket decline.”

Mr. Carter at Hapanowicz & Associates, said advisers at his firm have been trimming equities as they have grown in clients’ portfolios.

“”If we have a client who should own 10 percent in a category of stocks and they now own 13 percent — from the standpoint of their financial plan and their risk management program — we need to bring that back closer to 10 percent,” he said.

The goal is to keep the overall portfolio in the right balance.

“We are making sure that the equity side of client portfolios is where it needs to be,” he said. “But at the same time, for clients who are over-allocated because of recent market moves, we are using those as an opportunity to trim equities and either add to the income stream bucket or allocate back to a more conservative asset class like bonds.”