Even if all goes according to the bullish scenario, however, investors will soon realize that investing in a bull market approaching senior-citizen status is different than what they've grown used to. Until recently, for instance, a winning strategy for investors was simply to buy and stick with winning stocks. But a momentum-based approach is no longer working. For evidence, look no further than the recent fall of high-flying biotech and social media issues. The Nasdaq Biotechnology index has fallen 16 percent from its February 25 peak, and shares of social media standouts Twitter (TWTR) and LinkedIn (LNKD) plunged 48 percent and 40 percent, respectively, from their recent peaks.

The good news is that the market's most overpriced sectors are retreating without bringing the broader market down with them. "Bubble talk was applied broadly to the market, but really applied to only those high-flying areas," says Liz Ann Sonders, chief investment strategist at Charles Schwab.

Stocks overall are still fairly valued, if no longer cheap. Based on estimated year-ahead profits, the S&P 500's price-earnings ratio is 15 -- a tad below the long-term average and well below the levels of past market peaks. If the market's hot spots can cool down on their own, "it's possible we can wring out the excesses without a major calamity," says Sonders.

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The perils of politics

That's unless Washington roils the markets again. Midterm election years bring political uncertainty and stock market volatility. In every midterm election year since 1962, says Sonders, the market has corrected, sometimes viciously, with average declines of 19 percent. But patient investors are rewarded, because 100 percent of the time, the market has rallied -- and significantly, with average gains of 32 percent for the 12 months following the correction.

Geopolitical upsets -- especially in reaction to Russia's activity in Ukraine -- are another worry. "There may not be a fighting war, but an economic war could have an effect on the global economy," says David Kelly, of J.P. Morgan Funds.

Whether or not a major pullback occurs, investors should expect continued shifts in winning styles and sectors. For example, the long winning streak of small-company stocks is likely coming to an end. From the market bottom in March 2009 until March 4 of this year, cumulative price gains for the small fry far outpaced their blue-chip brethren: 228 percent for the Russell 2000, a small-company index, compared with 178 percent for the S&P 500, more of a large-company barometer. But since its recent peak, the Russell 2000 has retreated 6 percent, while the S&P has been essentially flat.

Historically, small-company stocks have led the market in periods of slower economic growth, but they fall behind when GDP grows by 3 percent or more, says Russell Investments, the keeper of the index. Moreover, small-company stocks recently traded at an average P/E that is nearly 110 percent of the 20-year average, while the P/E of large-company stocks was 6 percent below their 20-year average.

Similarly, when economic growth lags, investors bid up the stocks of companies -- of whatever size -- that have rapidly growing earnings. So-called growth stocks have generally led the market since early 2007, an unusually long cycle of dominance. But with confidence in the economy improving, it makes sense to gravitate toward stocks selling at bargain levels relative to earnings and other traditional gauges of value.

That means choosing shares of Caterpillar (CAT) over Tesla Motors (TSLA), International Business Machines (IBM) over Netflix (NFLX), and Merck (MRK) over Regeneron Pharmaceuticals (REGN). So far this year, iShares Russell 1000 Value (IWD), an ETF that focuses on large, undervalued companies, has gained 3.9 percent, while iShares Russell 1000 Growth ETF (IWF) has gained 1.1 percent.

"Rotation is the lifeline of a bull market," says veteran market analyst Ralph Acampora, of Altaira, a money-management firm based in Switzerland. "As long as the money goes somewhere else, but stays in the market, that's fine."

As you tweak your own portfolio, consider building some cash reserves. In a shifting market it doesn't hurt to take some of the money you've made off the table to be able to pounce on new opportunities or if changes in your circumstances so dictate.

Sam Stewart, chairman of Wasatch Funds, has accumulated a little more cash than he normally holds in the funds that he manages as he prunes stocks he now considers overpriced from his portfolios. "Choppiness is a reasonable forecast for the year," Stewart says. "I want to make sure we have some dry powder on hand in case the market does correct and we see companies we want to buy at attractive prices." He says he will be looking for bargains among technology, health care and financial firms -- particularly those that are lifting their dividends.

Stewart currently recommends shares in CVS Caremark (CVS) because he believes the corner drugstore is becoming more central to family health care. Stewart also likes Wells Fargo (WFC), trading at a reasonable 12 times estimated year-ahead earnings and yielding 2.8 percent. The bank navigated the financial crisis "just fine," he says.

Let's just hope that investors will be able to say the same thing about navigating the stock market this year.

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