U.S. stocks had a blockbuster second-quarter. Indeed, both the Dow and S&P 500 have posted their best returns in decades. How long can this outperformance last? With market sentiment still generally positive, some investors are asking whether supportive central bank policies and hope for a rapid economic recovery may be the set up for a third-quarter market surge.

In this week’s podcast, we discuss how the dominant narrative that had supported the second-quarter rally is increasingly coming under pressure. Stretched asset valuations and a historical precedent for weaker market returns argue for more caution in the coming quarter. As a result, we recommend that investors use recent market strength to reduce investment risk and raise cash through portfolio rebalancing.