Avoid this 1 investing move as the S&P 500 is up 16% on the year and may continue to rise.

By just about any measure, 2024 has been a tumultuous year.

Abroad, violent conflicts persist as domestic political turmoil intensifies. Although market analysts anticipated inflation would decrease, prices have mostly remained stable. As a result, the Federal Reserve has kept interest rates high, despite projections of six or seven cuts for the upcoming year.

Despite the negative outlook, the S&P 500 has achieved a 16% return in 2024.

"Ryan Detrick, chief market strategist at the Carson Group, says that even the most optimistic person wouldn't have predicted the best start to an election year since 1976. This has been the bull's dream of a year. The good news is that there is still some potential left."

Market watchers believe the current bull market is not over yet, and this has implications for your investment portfolio.

Positive, but uneven performance

The big names are carrying the majority of the gains in the stock market, with broad indexes showing only modest growth.

Microsoft, Nvidia, Amazon.com, and Alphabet have all experienced significant returns in the past year, surpassing the overall market growth.

"According to Christopher R. Jackson, senior vice president of UBS Wealth Management, there is a significant difference between a few large tech and AI-focused companies performing exceptionally well and the rest of the market struggling to keep up. This disparity presents both risks and opportunities."

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The risk for equities, particularly in the U.S., is valuation, according to him.

If the S&P 500 is trading at a significant premium to its history, it's possible that investor enthusiasm may decrease, resulting in a potential pullback or muted gains in the second half of 2024, according to him.

A broader move upward in the second half

On the other hand, strong leadership from tech could provide an opportunity for other parts of the market to catch up, resulting in broader gains over the next few months, according to Jackson.

The S&P 500 sectors and indexes tracking small- and midsize-company stocks are all experiencing positive returns year-to-date, with six sectors featuring double-digit gains.

"Detrick states that while tech and communication services have excelled relative to other sectors, it is incorrect to claim that all other industries are performing poorly."

Detrick believes that if inflation continues to improve, the second half of the year will likely see a few rate cuts.

The stubborn housing market could be loosened up, which should encourage business investment, leading to positive effects on the broader market, according to him.

What a positive outlook means for your portfolio

Despite the advice of financial experts to avoid making significant changes to your portfolio based on short-term market predictions, Detrick and others are making minor adjustments to client portfolios.

"We are considering a baton pass," he remarks. "We are examining some underperforming areas, but with an improving economy, we anticipate outperforming in the second half of the year."

The portfolio should be shifted towards the financial and industrial sectors and increase the holdings in small- and midsize-company stocks.

According to Jackson, investing in an equal-weighted version of the S&P 500, as opposed to the standard version that holds more shares of larger companies, is a great way to achieve diversified exposure to a market he anticipates will move broadly, albeit modestly, upward.

It makes sense to start selling some of the profits and diversify the exposure to tech and communication services, which currently account for 40% of the S&P 500, he says.

It is advisable to refrain from making any significant changes to your investment portfolio in the upcoming months, based on the current election trends.

"Detrick advises against allowing politics to influence investment decisions. Despite the differing opinions about Presidents Obama, Trump, and Biden, the stock market performed well under all three leaders."

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