25 Jan Worried about a stock market dive?

Q. Stocks have gone up, and I’m afraid we’re closer to a downfall. I’m usually at 60 percent stocks and the rest fixed income. Should I change my allocation? I’m 51 with no plans to retire yet.
— Tips needed, please

A. Remember, first, that investing is a long-term business. Even if you wanted to retire at age 51, you’d need to fund your post-working years for maybe 40 years. That’s a long time, and you’d need growth in your portfolio to get you there.

The stock market is where some of your money will probably need to stay.

President Trump and the Republican-led Congress are expected to cut taxes and regulations and approve big infrastructure spending projects, said Stephen Craffen of Stonegate Wealth Management in Oakland.

“Businesses and consumers are more optimistic, which results in more spending at stores and on new equipment,” Craffen said. “This should boost the economy and increase corporate profits. Major Wall Street banks predict stocks will continue to go up.”

Most analysts agree that the market has already priced in tax cuts and a big infrastructure spending bill, Craffen said, but infrastructure already looks in doubt because such large spending would add to the already large debt.

The biggest wild card is inflation.

“Less-than-expected tax cuts, combined with higher inflation and interest rates, will hurt stock prices,” Craffen said. “Interest rates are already going up. Rising interest rates will hurt bond investments.”

That said, it is nearly impossible to time the market.

“We highly recommend investing across multiple asset classes beyond the classic ‘stocks and bonds,’” he said. “Since you are still young and working, you have time to ride out a down market should one occur.”

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This post was first published in January 2017.