Former Federal Reserve chair Alan Greenspan coined an infamous phrase: “irrational exuberance,” to describe investor sentiment during the dot-com bubble of the 1990s. This sentiment could be governing the stock market right now.

Wall Street seems to think that coronavirus-related threats have substantially diminished. I wouldn’t be so sure.

Below, you’ll find a special video alert in which I concisely discuss precautionary (but potentially profitable) steps you should take during these extraordinarily risky times.

Sure, you should start preparing for a post-COVID world, but tread carefully. The latest numbers indicating that the virus might be in retreat could be statistical anomalies.

Investors may be getting ahead of themselves. I should remind you that in mid-February, some government officials were actually saying the virus had been “contained” and recommended that investors “buy on the dips.” I hope you hadn’t followed their advice.

Read This Story: Stock Market Rebound or…Bear Trap?

The CBOE Volatility Index (VIX), aka “fear index,” has been easing back lately, an indication that perhaps financial markets are stabilizing. The VIX on Monday dropped below 45, its lowest level in about a month.

The three main U.S. stock market indices soared yesterday, racking up their best day in two weeks, as the coronavirus pandemic showed signs that maybe, just maybe, it was leveling off.

The Dow Jones Industrial Average yesterday jumped 7.7%, the S&P 500 rose by 7.0%, and the technology-intensive Nasdaq composite index climbed 7.3%. Advancing issues outnumbered decliners by a 10-to-1 ratio on the NYSE and, yet again, volume was high.

In pre-market futures trading Tuesday morning, the three U.S. indices were poised to open higher, due to continued optimism over COVID-19. However, health experts warn that premature easing of social distancing strictures could lead to secondary outbreaks and fresh waves of infections and deaths.

A news cycle is not a trend…

The COVID-19 outbreak in key “hot spots” such as New York City seems to have slowed, but that could be temporary. A positive news cycle is not scientific proof and neither does it mark a lasting trend.

The U.S. must still contend with the 10 million Americans who filed for unemployment claims during the last two weeks of March. What’s more, corporate earnings are projected to show sharply negative numbers in Q1 and Q2. Stock prices reflect projected future earnings and those projections are abysmal. Wishful thinking won’t put cash into corporate coffers.

In an ominous sign, British Prime Minister Boris Johnson, who initially scoffed at social distancing, is infected with COVID-19 and spent last night in intensive care, with worsening symptoms.

Risk-on assets are enjoying a rebound, but stocks in sectors most affected by the pandemic, such as travel and leisure, remain under severe pressure. These industries won’t recover anytime soon. Gold prices are rising and other safe havens continue to experience high demand, suggesting that underlying nervousness remains.

There’s another infamous phrase, used by government officials during the Vietnam War: “light at the end of the tunnel.” It was expressed in the 1960s, to convey optimism during the height of the war, when in fact the fighting was getting worse and many more years of death and destruction awaited ahead. I heard an official use the expression yesterday on television in regard to the coronavirus and it made me wince. You’d think those who uttered the phrase would be more aware of its historical irony.

Steps to take now…

The rest of this year promises to be uncertain, with choppy trading and further sell-offs ahead. Your capital preservation strategy should include the right asset allocation, tailored to your financial goals. In a bear market, you should gravitate toward hedges and defensive sectors.

Keep plenty of cash on hand, to scoop up the bargains when it appears that the bear market has bottomed. Rotate toward recession-resistant sectors such as utilities and health care.

Technology stocks involved in mobile work-at-home capabilities, virtual private networks, and the cloud are setting the table for growth after this pandemic ends.

Make sure your portfolio contains gold. Geopolitical uncertainties have propelled gold in recent months. The price of the “Midas metal” hit a seven-year high on Monday, but it probably has even further to run.

Read This Story: The Midas Method: Why Gold Shines Now

Companies tapped into 5G (“fifth generation”) wireless technology will weather the crisis better than most. The global implementation of ultra-fast 5G is a trend that certainly won’t be stopped by the pandemic.

Dividend-paying stocks are proven tools for long-term wealth building, but they’re also safe harbors because companies with robust and rising dividends by definition sport the strongest fundamentals. Utility stocks are exemplary dividend payers.

Above all, don’t try to time the bottom of the bear market. The COVID-19 pandemic remains a threat and the economic damage has been considerable. Stay invested, but stay cautious. We’re not out of the woods yet.

In my video below, I offer advice and guidance to help you cope with the global coronavirus crisis.

Special Video Alert From John Persinos