There is an old Amercian saying "If three people tell you that you are drunk, you better lie down".

Adapting this to stock markets "if three valuation indicators tell you that the market is crazy expensive, then you better sell". 

As we say goodbye to 2024 and head into 2025, the US economy is experiencing strong economic growth with many asset classes reaching nosebleed levels. It is no longer sensible to talk about economic fundamentals in relation to stock market valuation. The same can be said for many other asset classes. 

It is now all down to investor sentiment. And that can change very quickly. Just one event can turn a booming market into a landslide of epic proportions. 

The question is how do we position our portfolio?

There are essentially two methods. You can take out insurance by shorting or hedging the market for a large loss and this can be done by buying put options. Many investors don't like shorting, and it can be tricky as many put options expire worthless meaning you lose the investment allocation. 

Alternatively, you can position your portfolio and increase the allocation to uncorrelated asset classes. Bonds and gold and to some extent cryptocurrencies like bitcoin are generally uncorrelated to stocks, but again these investments stand a chance of losing money.

Lastly there is what many call a 'retreat' to cash. 

For most inexperienced investors, this is probably the best option however holding cash can be painful. Just prior to the end of a secular (long term) bull market, there is usually a huge surge upward where many companies and classes become completely disconnected from fundamentals. 

This is the season to be jolly. 

If you are attending various Xmas parties, I would advise you to go easy on the drinks lest you receive some reflections on your condition from more sober observers. 

My advice is you maintain that approach to markets. The question as always is am I the first to tell you that or the third?