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When the stock market hit a new high recently, Brandon W. from Bridgewater, N.J., did not know what to do.

Stuck between wanting to throw his available cash into the market and being nervous about the market being too high, Brandon took some advice he read about the best way to calm his nerves was to back away from the market, catch his breath and make some plans.

“So I didn’t blow it,” he said in an email. “I didn’t give in to the worries that the market had to go down — and I am still worried about that now, though maybe feeling a little better — and I didn’t just throw everything into the market.

“So the advice about sizing up the situation and controlling my emotions was good,” he added, “but now that it has been another week or so, it does leave me with a question: What CAN I do now?”

It’s a good question, because while the initial emotions of the new market high have faded, plenty of investors are still caught betwixt and between, wanting to make sure they don’t miss out on a continued rally, but afraid of suffering the consequences if a downturn is in the offing.

While experts say that the best advice for investors who like their asset allocation and plan is “Don’t just do something, sit there!” they recognize that there are some things that nervous investors can do that can help them take more control without blowing things up regardless of what happens next on the market.

Re-examine your buying and selling parameters. While many experts expect a pullback once the current rally has an off-day or two, you need to size up whether the setback will be something scary or if it will be a buying opportunity. To do that, re-examine or re-establish your buying criteria.

For example, say you consider it a buying opportunity when dividend yields hit a certain target and a stock or mutual fund or entire sector can be considered undervalued. While you may not be able to find anything that you can buy into now comfortably at your numbers, any pullback might help you out.

Even if you simply think that it’s just time to put some of that spare cash to work, make sure you are buying something you want — a fund or exchange-traded fund that diversifies your portfolio, that gets solid ratings and has low costs — instead of making some kind of impulse buy to put your chips into the game.

Revisit your asset allocation. The market has had a nice strong run, and that can mean that a portfolio is off-kilter. For a simple example, let’s say an investor wants a 50-50 split between stocks and bonds; if the stocks rise sharply but the bonds lag behind, the assets could quickly move to a 55-45 or 60-40 split.

If you need to make an adjustment and feel like you have to “do something” in these market conditions, rebalance the portfolio back to its targets, culling your winners and shoring up your laggards until the holdings are back on plan.

Make sure your funds are keeping up with the pack. Investors are checking their portfolios against market highs to see if they have recouped the drop they suffered in 2009.

They should also be looking to see if their funds have done as expected in that time.

Selling a mutual fund does not constitute blowing up a portfolio, especially if the assets are redeployed in a better issue in the same space.

If you feel the need to make a change, maybe the issue is that in this market horse race, you’re riding a mule.

Don’t let the market’s rally go to your head. Experts who study behavioral finance note that nothing breeds mistakes more than a nice rally to generate overconfidence in the market.

This shows up in a lot of ways, but most often with investors who let a confirmed run change their feelings about the market, even when nothing significant has changed.

If you were nervous about the market on the first day when it reached record territory and nothing fundamental has changed during the recent run, it’s important not to be blinded by the winning streak.

I recently bumped into a friend who was expressing a lot of optimism about the market, thinking there might be a momentary blip before a great bull-market run; I had seen him on the day the market peaked, and he did not believe the rally could last and expected at least a 10 percent fallback.

Market and economic conditions hadn’t changed, only the guy’s mood, thanks to the winning streak.

If you let that kind of market activity flip-flop your thinking, you will forever be chasing what just happened, instead of staying focused on what’s next.

Chuck Jaffe is senior columnist for MarketWatch. He can be reached at or at P.O. Box 70, Cohasset, MA 02025-0070.

Copyright 2013, MarketWatch