The stock market has repeatedly reached new highs, and investors are happy. However, concerns about the high prices of stocks have raised a question: Should you celebrate with champagne or prepare for the storm? The answer is both.

Of course, it is worth celebrating that the S&P 500 index has risen 18% this year and recently closed above 5,633 points for the first time. However, the power of boosting the market - enthusiasm for artificial intelligence - has also raised concerns because only a few stocks have driven most of the gains. Jonathan Krinsky, chief market technician at BTIG, believes that a combination of narrow market breadth, optimism, and low volatility is causing an unprecedented situation.

In a recent report, he wrote, "The rubber band is stretched every day, but predicting when it will break remains a unique and difficult task."

Some people see shadows of the previous tech bubble. According to the Alight Solutions 401(k) Index, the average stock allocation of 401(k) plans has reached 72%, the highest level since the bursting of the internet bubble in January 2001. From some metrics, the market also seems rather expensive. Gene Balas, investment strategist at Los Angeles-based Signature Estate & Investment Advisors, points out that the cyclically adjusted price-to-earnings (CAPE) ratio is approaching levels not seen since the Internet era.

However, there is one key difference: this time, the high valuations of Nvidia and other large technology stocks are supported by real profits. In addition, Doug Ramsey, chief investment officer of Leuthold Group, believes that other stocks in the market are not expensive. He wrote in a recent report, "The valuations of most S&P 500 index components are quite cheap relative to the index itself."

So where should retiring investors go from here? Complacency is certainly an option. Rob Austin, head of thought leadership at Alight Solutions, said, "People are very, very satisfied with watching their 401(k) balances grow."

But it's best to develop an investment strategy that can help you participate in an upward trend and weather the inevitable downturn without getting out.

For example, if your 401(k) is invested in target-date funds, the best approach may be to stand pat. Target-date funds are managed by professionals, with portfolios gradually becoming more conservative as the target retirement year approaches. Fund managers adjust the mix of stocks and bonds to keep it consistent with the fund's objectives.

The 60/40 index of stocks and bonds is considered a 'moderate allocation' for target-date funds, with a return this year of around 9%. Although this return rate may not be as high as the S&P 500 index, the fund is less likely to be affected by a large decline if technology stocks start to crack.

If you invest on your own, consider rebalancing your investment portfolio. This may require selling some winners - large-cap growth stocks in today's market - and buying into poorly performing sectors or niche markets. There are many such stocks, including real estate, small-cap stocks, and value stocks.

John Rekenthaler, vice president of research at Morningstar, is inclined to rebalance value stocks in the current market - at least for those who are not close to retirement age yet. Although the performance of growth funds has been generally better than that of value funds in recent years, during the market crash of 2022, the Vanguard Value ETF fell only 2%, while the Vanguard Growth ETF fell 33%.

Rekenthaler said that often, rebalancing from growth to value stocks does not help your investment portfolio, 'but when it helps you, it really helps you.'

People nearing retirement may prefer more conservative asset allocations, while those with decades to go before retiring still need a high proportion of stock allocation. Investors who haven't touched their portfolios for a while will have a higher stock allocation than they used to. As stocks take up more space in the investment portfolio, the proportion of bonds will become smaller.

"This is no different from coming home from Europe for two weeks and seeing weeds growing in your hedge fund," said Madeline Hume, senior research analyst at Rancho Santa Fe, California-based AlphaCore Wealth Advisory.

This form of rebalancing is like cutting back on hedge funds - cutting back on some stocks and then investing the proceeds in bonds. If stocks continue to rise, this may not look pretty, but you'll be glad you trimmed before the stock market crashed.