Liz Ann Sonders, chief investment strategist at Charles Schwab, told CNN's Alison Kosik on "Markets Now" on Wednesday that investors are overestimating the longevity of the bull market. And they're putting themselves at risk.
To make the most of their investments, people need to stick to the "tried and true principles" of diversifying and rebalancing their portfolios, she said.
"Money that has been invested in the market has appreciated to a significant degree, and there's been no paring back," Sonders said. "That's why household exposure to equities is at a historically high level."
"There's never a bad time to pare back some profits," she added.
Investors know that they need to buy low and sell high. But "left to our own devices, we tend to do the opposite."
Rebalancing, Sonders said, "forces you to do what we know we're supposed to do."
"That's the most important thing to do right now," she said. "Don't get greedy."
Escalating trade tensions could slow the market, she said.
Sonders warned that if 25% tariffs go into effect on $200 billion of Chinese goods in September, the United States could be hit with unexpected retaliatory measures.
"China has a lot of ways that they can retaliate," she said. For example, China could devalue its currency to fight the tariffs, she said.
A weaker yuan could make China's export industry more competitive globally, as it makes Chinese products cheaper for those paying in dollars.
"I don't think we imminently face a currency war on top of a trade war, but that is a risk," she said.
"We're still underestimating what would happen" if the trade war gets worse.
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