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The S&P 500 has been climbing for nearly a decade and, in August, its upswing became the longest-running bull market in U.S. history. Does that mean it’s time to start looking for shelter from the decline that seems sure to follow?

The answer may surprise you. For all the concern that has been expressed about this geriatric bull, a look back at history shows investors don’t do well by jumping out of stocks simply because a rally has grown old.

Charlie Bilello, director of research at Pension Partners LLC in New York, recently offered a fun way to look at the numbers. He calculated what would have happened to a U.S. investor who went back in time and loaded up on stocks. This hypothetical investor would have sold his stocks every time a bull market became the longest on record, then bought back into the market after it declined at least 20 per cent.

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From 1932 to the present day, this in-and-out investor would have turned US$10,000 into US$11.6-million. Not bad, you might think. But here’s the catch: An even simpler strategy of buying the S&P 500 and holding on, without ever selling, would have turned that initial $10,000 into US$139-million.

“Determining the length of a bull market is of zero value to investors,” Mr. Bilello concludes. “And if acted upon, it’s actually of negative value.”

To be sure, one of the problems here is that measuring the age of a bull market is a more arbitrary matter than most people realize.

As Mr. Bilello explains, the standard definition says a bull market consists of a 20 per cent or greater rally in stock prices. The bull ends when those same stock prices decline by 20 per cent or more.

The more you think about this definition, the more questions you’re likely to have.

For starters: Why is 20 per cent the dividing line? Why not 19 per cent, 21 per cent or some other number pulled out of thin air?

Some other issues: Do you use closing prices or intraday prices? Do you include dividends? And, for that matter, which index do you look at to measure the market’s ups and downs?

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Depending on how you answer these questions, you arrive at different results. For instance, if you use the S&P 500 as your benchmark, as most people do, the rally that began March 9, 2009, qualifies as the oldest bull market on record. But if you use the broader Wilshire 5000 index, it doesn’t. Similarly, if you use intraday prices instead of closing prices, the current bull market is no record setter.

But maybe debating definitions isn’t the point. People who are worried about the age of this bull market often have supporting reasons for their anxiety and many of those worries are eminently reasonable.

For instance, U.S. stocks look expensive on many metrics. They also seem rather tightly focused. A handful of tech stocks have driven much of the market’s gains in recent years. If something were to happen to them, this bull would quickly run into a wall.

For all those reasons, investors who want to reduce their exposure to the market aren’t being silly. The challenge for many of them is to find a way to be cautious without sacrificing potential gains if the market were to keep on climbing.

There is no perfect way to do this – if you truly want to avoid the risks in the S&P 500, the only way is to avoid the S&P 500. However, investors who want to hedge their bets – at least a little bit – may want to consider moving into an equal-weighted version of the index.

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An equal-weighted index fund holds an equal-sized portion of each of the stocks in a given benchmark. In contrast, the standard versions of most well-known indexes hold stocks in proportion to each stock’s market capitalization – that is, the total market value of a company’s shares.

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Why should an investor prefer equal weighting? Lawrence Hamtil of Fortune Financial in Kansas City, Kan., has written a series of blog posts on the matter and he points to greater diversification as one key benefit.

Market cap-weighted indexes can be dominated by a few large companies, because those giant enterprises have many more shares outstanding, at higher prices, than their smaller counterparts. In contrast, an equal-weight index will invest the same number of dollars in the smallest company in the benchmark as it puts into the biggest.

At a time like now, when a handful of giant tech companies make up an unusually large chunk of the S&P 500, an equal-weighted index fund could offer a dollop of protection against the possibility that big tech hits a bump. People who are worried about this elderly bull, but don’t want to exit the market, may want to check out this alternative.

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