When Markets Rhyme: Managing Gains in a High-Valuation Era

As the market continues to grind higher in 2025, many pundits suggest that today’s environment feels reminiscent of the late-1990s tech bubble. There’s debate about whether Mark Twain, Theodor Reik, or someone else first said, “History doesn’t repeat itself, but it does rhyme.” I won’t settle that argument, but I agree with the sentiment.

As an analyst, I often ask during periods like this: What is different this time? Frequently, the honest answer is not much.

Lessons From Cycles

Markets are naturally prone to booms, busts, and periods of excessive valuation. I’m also reminded of the old investment saying: Markets can remain irrational longer than you can remain solvent.

When I interviewed for my role at Knights of Columbus, I sketched a sine curve on a paper-covered tablecloth to illustrate my perspective. I explained to the man who would become my boss that I’m smart enough to know I’m not smart enough to time the market. Our goal, I said, should be to capture roughly 60% of market moves, without obsessing over calling precise tops and bottoms.

Managing Gains and Concentration Risk

So what should an investor do amid these familiar patterns and market sayings? Many investors get caught up in the concept of having owned some of the “Magnificent 7” for a significant period of time and now face significant unrealized gains in their portfolio. Paying taxes is not something anyone wants to do, but it is important to trim winners, so you do not become overly concentrated in any one or even a handful of positions.

In tax-deferred accounts, rebalancing is even more compelling: harvesting gains and maintaining proper diversification can help you redeploy profits thoughtfully. After all, trees don’t grow to the sky. Diversifying strategies also allow your portfolio to participate across a wide range of market environments.

Integrating Tax Strategy With Investing

At Innovative Asset Advisors Group, we work with clients to manage tax implications through tax-loss harvesting and by coordinating closely with their CPAs. This ensures investment decisions align with each client’s broader tax strategy.

If you’d like to explore how we can help manage both your portfolio positioning and tax exposure, please reach out so we can discuss how we might be able to work with you and your accountant to help effectively manage both your portfolio position and tax exposure.