Here's How I'm Managing My Million-Dollar Portfolio Amid a Historically Pricey Stock Market

With just a handful of trading days left in 2025, it's safe to say this will go down as another exceptional year for investors. Although the ride was bumpy at times, the ageless Dow Jones Industrial Average ( ^DJI +0.60%), broad-based S&P 500 ( ^GSPC +0.32%), and growth-inspired Nasdaq Composite ( ^IXIC +0.22%) have, respectively, risen by 14%, 17%, and 22%. But a new year brings new challenges . Although professional and everyday investors have clearly been enamored with the prospects of artificial intelligence (AI) and quantum computing, as well as the likelihood of further Federal Reserve rate cuts, it's from a guarantee that the current bull market will continue in 2026. According to the time-tested Shiller Price-to-Earnings (P/E) Ratio, which is commonly referred to as the cyclically adjusted P/E Ratio, or CAPE Ratio , this is the second priciest stock market in history, dating back to January 1871. The only time stocks have been more expensive than they are now is in the months leading up to the bursting of the dot-com bubble, which saw the S&P 500 and Nasdaq Composite shed 49% and 78% of their value, respectively, on a peak-to-trough basis. Image source: Getty Images. Historically, pricey markets have generated weaker 10-year average annual returns. It means investors must be more mindful of their investment strategies. In other words, throwing a dart at a list of AI and quantum computing stocks probably isn't the best idea in 2026 (or beyond). With an understanding that pricier stock markets come with the heightened risk of weaker annualized returns and the possibility of a (short-lived) crash, here are the steps I'm taking when managing my million-dollar portfolio. Stay the course with core positions Let me preface any discussion by noting that I'm a long-term investor at heart. The overwhelming majority of the three dozen securities in my portfolio (35 stocks and one exchange-traded fund ) have been held for at least one year, with a couple of positions surpassing the decade mark. My investment philosophy is modeled after that of the soon-to-be-retired CEO of Berkshire Hathaway , Warren Buffett. With the above being said, I'm not doing too much with my core positions , which range anywhere from my top three to top 12 holdings. Although stock market corrections and bear markets tend to affect most sectors and industries, the average bear market downturn has lasted approximately 9.5 months since the start of the Great Depression (September 1929), based on the findings of Bespoke Investment Group. Statistically, it pays to be a long-term optimist and not overreact with the investment positions you believe are your best ideas. Furthermore, I don't foresee any of my core positions being disproportionately hurt if an AI and/or quantum computing bubble were to form and burst. NASDAQ: META Key Data Points For example, social media titan Meta Platforms ( META +0.39%), my fourth-largest holding by market value, generates roughly 98% of its net sales from advertising on its top-tier apps (Facebook, Instagram, WhatsApp, and Threads)....

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