These sorts of outlooks are notoriously hard to predict.
Paul Tudor Jones (one of the most successful investors of our time) is of the mindset that if anything we are about to see equity appreciation far in excess of what we have seen for decades.
If that's the case, right when you're looking to rebalance your portfolio, you're going to be looking at a much more difficult decision, having already missed out on price appreciation that would be quite useful in padding downside risk...
Perhaps just step away from market cap weighted index funds as a long term adjustment. That's something that with a proper basic framework is advisable as a general portfolio management approach as well. (I have some SMLF - Smallcap Quality/Value, Berkshire, generic Global Equity exposure, not for outright returns, but to lower exposure to the concentrated passive market cap weighted indexes and diversify risk exposures).
Trend Following exposure is a great add as well, since it is negatively correlated with risk assets in many macro/market regimes.
Probably healthier to address your very real concern with modifying the long-term portfolio design rather than take a short-term market timing approach which is more of a negative expected value.
> These sorts of outlooks are notoriously hard to predict
The gut feeling you're about to lose your life savings isn't worth it for a lot of people, when I had most of my money invested it was always in the back of my mind. I cashed out and bought land/started building a multi generational house. All doubts and fear disappeared overnight, I'm for sure losing money compared to going all in on Nvidia or even btc, but I don't need any mental gymnastics to rationalize my choice.
> I cashed out and bought land/started building a multi generational house
interestingly, my wife and I have discussed this a lot too. We have 20 acres in SE Oklahoma that we got a really good deal on during the pandemic, the land is unplatted and the realtor didn't know there was water and power service already setup by the previous owner. We want to build a small cabin/house over the next couple years. It's like a retirement backup plan, "if everything goes to hell we can still go sit on our land in OK and watch the sunset..."
my 401k is setup in pretty high risk ( according to Vanguard ) index funds. Now that i'm older and looking to retire in the next 10-12 years, the investments need to be re-balanced anyway. As for the brokerage account, it's just a vanguard sp500 index fund. I'm not super exposed to the mag7 but they're such a huge component of the overall sp500 that when the bubble pops it's going to affect the sp500 quite a bit. I was actually looking at some of the smallcap Vanguard funds available to me because they seemed to fair ok in the .com bubble burst while the sp500 and especially the nasdaq were hit hard.
You are being mindful of some real risks and concerns.
That said, there's no reason to have to feel like you need to take a stab at it totally by yourself. Heck, that's what I'm doing in the day to day - putting together a few of these portfolios for people. There are certainly advisors and managers who know the academic side of this and can diversify away from concentration risks and such.
There are also many great tools in the relatively recent future that have opened up for common investors to diversify smartly. You can get pure trend following wrapped up in an ETF. You can get 100% equity 100% bond wrapped up in an etf at half of the size, so you can fit Gold and Trend in a portfolio with no hassle (both are low return but great from a diversification standpoint, so most retail investors want to lever up a bit to get back to the standard SP500 return/variance profile).
If you don't or can't find someone who can math it out for your individual case, it's also an option to just pull a few of the best proven individual ideas, such as "have some international diversification". ETFs are easy to grab here. Even 10-20% can pad out some of the US concentration and dollar exposure a bit. Smallcaps, like you said, are another way to shift away from the "size factor" dominated index weighted ETFs. The Nifty 50 bubble in the 60s was a major catastrophe, and history rhymes, so why not hedge a bit while still sticking to a proven investment framework? No financial advisor is going to look at an equity slice of 80% S&P, 10% international-ex-US, and 10% smallcap and say it's a stupid idea. Actually, they will probably say it's a smart improvement over 100% S&P.
When it comes to smallcaps, the caveat is that the Russel2000 is filled with fairly low quality companies. High debt, value traps, you've got it all. That's diversification, but probably not the type you are seeking. That's why smallcaps are a great target to add some factor based investing returns. This is another diversified source of return in and of itself (AQR as 150 billion under management here), but why not overlay some Quality and Value factors on top of the smallcaps? Now you have a sprinkle of factor investing edge in the portfolio alongside the smallcaps, while not drifting too far from the status quo since smallcaps are a small allocation. Not going to toss out specific investment ideas but there are ETFs/mutual funds for this! Just stick to low fees and a long track record. A question like "I want 10% in smallcaps, but I want a factor overlay for Quality and Value", is a question that would actually get money out of a good advisor by the way.
Here's a good, slightly wonky, lecture on some of the esoteric yet quite "in your face" risks within a complex dominated by passive and index weighted flows. It's not at all a misguided though to think there are some risks out there in the left tails. This was a lecture from 5 years ago: https://www.youtube.com/watch?v=x-rJciYZmi0&t=1s
Paul Tudor Jones (one of the most successful investors of our time) is of the mindset that if anything we are about to see equity appreciation far in excess of what we have seen for decades.
https://fortune.com/2025/10/07/paul-tudor-jones-hedge-fund-b...
If that's the case, right when you're looking to rebalance your portfolio, you're going to be looking at a much more difficult decision, having already missed out on price appreciation that would be quite useful in padding downside risk...
Perhaps just step away from market cap weighted index funds as a long term adjustment. That's something that with a proper basic framework is advisable as a general portfolio management approach as well. (I have some SMLF - Smallcap Quality/Value, Berkshire, generic Global Equity exposure, not for outright returns, but to lower exposure to the concentrated passive market cap weighted indexes and diversify risk exposures).
Trend Following exposure is a great add as well, since it is negatively correlated with risk assets in many macro/market regimes.
Probably healthier to address your very real concern with modifying the long-term portfolio design rather than take a short-term market timing approach which is more of a negative expected value.