I believe the bull market is still intact and I do not want equity positions sold down in accounts…..it is not time to bail yet. I will tell you in advance when to start strategically reducing equity to move to more fixed income in your portfolio. Right now, it is not the time. The time to start selling down your equity exposure significantly will be when we get into “tight money” conditions. This occurs when the Bank Rate goes up many, many times. We are not there. While interest rates have started their upward move, we have had only 2 increases. I will be worried when we get to 8 increases…..so start counting. If interest rates go up each and every quarter then it will take 2 years to hit 8 increases, so we have time. If they take their time pushing up interest rates then it will be many years before we see tight money. So I am not preparing portfolios yet for a crisis. I instead have cash in portfolios to take advantage of a correction. And guess what….we are finally in a correction….so thank goodness. In fact, I am very relieved we are finally seeing it. Corrections can give back 10-15% and this is very normal and it happens every few years. This is another reason we should pay attention to 5 year rates of returns on portfolios rather than 1 year returns because I know I have to build in those corrective years. I get very worried when we don’t see bad markets every few years because if it keeps going up and up, then we will see a really big fall. So what to do….be patient. Right now we are in the back half of a bull market…..probably the 7th inning if you are comparing it to a baseball game. This means we need to have some different positions in portfolios than we did in the front half of a bull market. We need to add things like industrial companies rather than a lot of consumer staple companies.