Time to have some downside protection?

While I wouldn't short the S&P500, I nonetheless would be cautious if I invested in this index, as it has rarely been that expensive, once adjusted for monetary growth. The time might have come to focus on undervalued sectors (such as commodity producers) or countries (like Russia or Singapore), rather than investing passively.

Shorter-term investors might also consider long-short strategies or simple hedging, in order to reduce the downside risk.