Although it may feel like equities are due for a correction, playing it too safe could mean missing lots of upside, says BCA Research.

“According to our Global Investment Strategy service, equities momentum might look stretched, but waiting for a correction is likely to prove too costly,” BCA says in a research note.

“While many technical indicators are warning of a correction, the global equity market has continued to grind higher aided by an avalanche of liquid public savings moving into stocks,” BCA observes. “Recent market behavior resembles that of the second half of the 1995, when the Fed went on hold and share prices escalated. During this episode, stocks consistently looked overbought and ready to correct, however, a sizable pullback only came in 1998. Waiting on the sidelines proved extremely costly.”

“This leg of the bull market is typically both rewarding and volatile,” BCA counsels. “Correspondingly, investors should stay invested but consider an insurance strategy.”

“The market is overbought but a hard correction is unlikely. Hedge potential volatility, but stay long,” it concludes.