Timely Strategies to Protect Your Portfolio

"Set it and forget it" has been an elegantly simple--and lucrative--investment plan for the past nine years. The U.S. economy has rolled along, the stock market has soared, and interest rates, though rising since 2015, remain historically low. Just sitting still with a well-diversified portfolio has worked very well for many investors.

But nothing lasts forever, least of all economic and market trends. Although the timing and severity are unknown, the next recession and the next bear market in stocks are out there somewhere. A little planning today could sharply reduce the risk of heartache later on--especially if the markets take a sudden, serious hit from something unforeseen.

Let's be clear: We'd never recommend trying to time the markets with all-or-nothing bets. Even with Standard & Poor's 500-stock index up 329% from its 2009 low, not including dividends, there are plenty of good reasons to stay bullish on stocks: The global economy is expanding, U.S. consumer confidence is high, and robust corporate profits underpin share prices. And even if you managed to call the market top, you'd also have to call the bottom to get back in. "You have two decisions to get right," says Liz Ann Sonders, chief investment strategist at Charles Schwab. "That's a really, really difficult thing to do." (Prices and other data in this story are as of September 14.)

The logical strategy now is to fine-tune your portfolio: Make sure your investment mix matches your tolerance for risk and that it will meet your objectives over the next few years, such as providing needed income if you're retired. If your portfolio has been on autopilot for the past 10 years, it may simply be out of whack with your needs--especially if they've changed. Imagine if all of your clothing were a decade old. How