7 Tips for Clients Who Want to Ride the Bull Market: Advisors' Advice

Slideshow June 22, 2023 at 02:46 PM Share & Print

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The S&P 500′s recent bull market milestone likely left many investors wondering whether the time was right for some portfolio moves.

Given the uncertainty about the economy and the rally’s ability to sustain itself, clients may be even more confused about how to approach their investments than they would in a clear-cut bull market.

Market strategists appear to disagree on whether the S&P 500 index entered a true bull market earlier this month when it marked a 20% gain over its October trough. Some expect a recession and weaker earnings could drag stocks lower by year-end, while others are more bullish and predict at least modest market gains.

We asked financial advisors what advice they were giving clients who ask about putting more money into the market.

Check the gallery for insights from seven financial pros.

Dinah Wisenberg Brin

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1. Rebalance regularly.

With my clients, we’ve been consistently rebalancing their portfolios. The result is a natural shift of assets from "things they’ve lost the least" to "things they’ve lost the most." With the recent upswing of the market, this naturally means their equities have increased more in value also. We do not time the market, which is outside our control. We control what we can, and that includes being disciplined in periodic portfolio rebalancing.

There are some clients whose portfolios we’ve shifted away from bonds and into other fixed income assets during the market downturn. Again, we’ve rebalanced their portfolios, meaning we have shifted more of their funds into equities because that’s what has lost the most value during this time.

Some clients have asked for specific equities, and we have incorporated some of their ideas, but only if they fit their overall financial planning strategy. Unless a major life event takes place, we do not deviate from the client’s overall planning strategy.

— George Kao, financial planner, Reach One Teach One Financial

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2. Keep some cash.

For those who are looking to put more money into the equity market now, I would recommend not investing all your cash at once, but instead hold on to some cash. Though the Fed may stop raising rates, by holding the rate, it is still tightening, which will likely lead to lower growth in the near future.

Based on the historical rate hikes in the past few decades, rate hikes usually have a delayed effect on the market, and therefore even though we entered a bull market now, the market could dip again later this year.

A common question from clients is what to invest in the current economy. There is no quick answer that would be suitable for everyone, but in the high-interest-rate environment with credit contraction started from the regional banks, strong balance sheets, cash flow and earning capability are going to be more important than ever.

— Kristy Jiayi Xu, founder, Global Wealth Harbor LLC

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3. Don't time the market.

I will start with a famous quote from Peter Lynch: "Far more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves." I tell my clients that it is usually not a good idea to adjust their investment decisions based on the news media coverage. They should stay consistent and follow their financial plan whether it is a bull or bear market.

Trying to time the market is a fool's game. If they think they are going to need the money within the next five years then they probably shouldn't invest in equities; high-interest savings accounts or money market funds would probably be a better option. Investing is a marathon, not a sprint.

— Heath Biller, financial advisor, Fiduciary Financial Advisors

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4. It's not too late.

Now that the “bull market” bell has been rung, many clients are inquiring whether they’ve missed the opportunity to put new money to work in equities. For investors with at least a three- to five-year time horizon and the ability to tolerate some volatility, we believe that it isn’t too late to invest.

The S&P 500 index is a market capitalization-weighted index and while it’s up solidly on the year, almost all of the gain is the result of seven large technology stocks which have driven the strong results.

The other 490-plus stocks in the index are actually down a few percentage points for 2023. This means that the rally in equities hasn’t yet reached the broad market. We believe that as investors gain confidence that inflation is moderating and that the aggressive Federal Reserve tightening is ending, they will begin purchasing equities and the rally will broaden.

We would advise investors to take advantage of market weakness and dollar cost average into equities.

— Andrew Crowell, financial advisor and vice chairman of wealth management, D.A. Davidson

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5. Stick to your plan.

We are telling clients to stick to the plan. Most of our clients have a long time horizon and therefore shouldn’t focus on near-term events. Whether you think the market is now entering bull territory or think a recession is around the corner is almost irrelevant. Adjusting your investment plan should be determined by your personal situation.

We have some clients that want to deploy more money now, but we make sure that they are able to do so in a suitable manner. If they just got a raise or sold some property then it could make sense to deploy more capital. But generally, their risk profile has not changed, and therefore changing an investment strategy based on market technical levels can be a short-sighted move.

— Bryan Courchesne, CEO, Digital Asset Investment Management

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6. Don't be too confident.

We may or may not be in a bull market. Keep in mind the dot-com crash had 11 rallies before we hit rock bottom. We need better earnings, lower rates and more companies participating in the market recovery.

But let’s remember where we are today: mortgages are 7%-plus, inflation although decreasing stays above average, small banks still are in trouble and the consumer is running out of resources. These are difficult conditions to be confident in investment.

— Amar Shah, CIO and founder, Client First Capital

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7. Maybe later?

We're telling clients that while now may be a good buying opportunity, there may be an even better one in the next few months if a recession plays out, much like what is currently happening in Europe.

— Tim Uihlein, partner, managing director and senior wealth manager, Vincere Wealth Management

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