4 Things to Consider as the Dow Rallies to 20,000

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With the Dow Jones industrial average surging this week, some stock pickers are wondering whether the 20,000 mark is in reach. As CNN reported, Wall Street is betting on President-elect Donald Trump to beef up the economy. It’s quite the opposite of what happened when Barack Obama was elected president, although that changed over time, and there’s no telling if this winning streak will last.

“Most investors think of round numbers as good,” Robert Dowling, a certified financial planner with Modera Wealth Management in Westwood, New Jersey said, but “I wouldn’t say someone should make a specific move” based on the 20,000 milestone. Dowling and Jude Boudreaux, a certified financial planner with Upperline Financial Planner in New Orleans, shared some things to consider as investors keep an eye on the index.

1. Asset Allocation

Now’s the time to look at your asset allocation and see if it’s where you’d like it to be, Boudreaux said. “We keep hitting new highs in U.S. markets, and valuations are at historical highs, especially compared to international equities, which are at historical averages.” So rebalancing, or taking some of your gains and reinvesting them in slower-performing assets, may be the best practice. “If we believe things tend to reverse to the mean over time, which we do, and we don’t know when that will happen,” Boudreaux said, “now’s the time to take some of those gains [and reinvest them].”

Ask yourself: Do you have too much exposure in a particular area? If so, should you reduce it and allocate it to other assets that aren’t performing as well this year? “You need to be aware of how much is in each asset class,” Dowling said, not because you think the market is ready to burst but so you have confidence in what lies ahead. “The old adage is, buy low and sell high,” Boudreaux said. “When the market hits new highs, we have to ask ourselves if it’s time to sell even just part of our portfolio, but that’s never the way our brains work.”

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2. Tax Implications 

“This is the time of year to be thinking of tax strategy because these transactions have to happen before December 31,” Boudreaux said. You may consider gifting your appreciated stock or mutual funds to a charity or working with your tax advisor to determine your percentage of capital gains, which are capped at 15%.

3. Upcoming Expenses

As you look to the new year, consider any expenses for which you’ll need to prepare. These may include paying off credit card debt, refinancing your mortgage or shoring up enough savings to take on that home improvement project you’ve been putting off. Whatever it is, taking advantage of the market now by selling off assets may give you the cash cushion you need in the future, Dowling said. No one knows what will happen months from now, but some concrete planning can take out the guesswork.

4. The Number Itself 

Remember, it’s likely that, at some point, 20,000 will be just another milestone in the Dow’s long history, Dowling said, so don’t make any decisions based on the number itself. Be aware of the tax implications for selling gains, and don’t make any drastic moves if you can’t afford it. “Don’t say, ‘OK, the market is going to crash, so I’m selling everything or buying more of whatever is doing well,'” Dowling said. Plan your moves based on what’s best for you.

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This article originally appeared on Credit.com.

Jill Krasny is a reporter and editor at Credit.com. Prior to joining the company, she was a senior writer at Esquire and Inc. Magazine, where she covered a range of lifestyle and business topics. Her work has appeared in Mashable, Travel + Leisure and MTV. More by Jill Krasny