Be wary of market's swift surge

I know we're in the midst of a raging bull market. But I didn't know how raging until I checked out my retirement portfolio. It's up about 30 percent since January as I write this. Not a single asset class is in the red. Every investment -- my global bonds, my gold, my total stock market index fund -- has returned double-digits year-to-date.

It feels great. But who can forget March, when the Dow Jones industrial average was trading below 6,600 and my portfolio was worth half what it was when the Dow peaked above 14,000 in October 2007? I still have a long way to go before I'm ahead.

"While a lot of people want to cheer, it also makes your stomach turn a little bit and you're saying, 'Oh, gosh, but is that sustainable?' " said Becky Krieger, president-elect of the Financial Planning Association of Minnesota.

As always, some market-watchers are cheering "buy" and others are screaming "sell."

"Stay bullish!!!" writes James Paulsen, Wells Fargo chief investment strategist. "The stock market rally is not likely to end this early in a fresh economic recovery."

"Our economy went through a crisis," counters Jim Goodland of Plymouth, Minn.-based Securus Wealth Management. "Things just can't repair themselves this quickly." He thinks stocks are rising on hope and not much else.

Who's right?

Who knows?

Investors need to pay less attention to prognostications and more to their portfolios. Actually look at your portfolio. It won't look nearly as bad as you probably think. But it will look different. And you may or may not be comfortable with the investment mix.

For example, Goodland said that an investor whose normal stock allocation is 60 percent may have an allocation of 80 to 85 percent today because of the stock market's run.

Investors who have been handsomely rewarded for their recent bravery should rebalance, selling some winners and using those profits to scoop up losing sectors. "The old adage is to buy low and sell high, but too many people forget that second part. ... People need to condition themselves to know 'when to say when,' both on the upside and the downside," Goodland said.

Don't be greedy. If you're still too heavily invested in stocks and hanging on tight because you want to make up your losses, rethink that strategy. That's like when I play poker and go "all in" without enough knowledge to know the odds of winning.

What's your risk tolerance? Figure out how much risk you can afford to take, determine the appropriate mix of stocks and bonds and make adjustments that make sense for the long term.

Unless investing is your day job or your passion, quit with the market timing, already. Most of us stink at it. Research from the Schwab Center for Financial Research has found that time in the market is what's most important. From 1989 through 2008, the Standard and Poor's 500 returned 8.4 percent. Take out the 10 biggest one-day gains during that period, however, and the return would be cut to 4.9 percent.