Iconic folk singer and Nobel laureate Bob Dylan turned 80 years old on Monday. In honor of his birthday, I’ve been playing his music in my home office.

Dylan’s poetic lyrics are so versatile, they can be applied to anything, even finance. Hearing these words recently, from his 1964 song Ballad in Plain D, made me think of the stock market rally:

“And so it did happen like it could have been foreseen,

The timeless explosion of fantasy’s dream.”

Does the long bull run face a “timeless explosion” that could have been foreseen? Let’s look for answers.

Two painful lessons…

Investors who bailed out of the stock market when it was falling last year made a grievous mistake. Two lessons are apparent: 1) economic headlines are lagging indicators and 2) market timing is a fool’s game.

The S&P 500 bottomed out on March 23, 2020, just a week into New York City’s COVID-induced lockdown, and after that, it made a powerful recovery, month after month, smashing records along the way. It begs the question, of course: how long can the good times last?

Stocks continued their ascent on Monday, as investors shrugged off inflation worries to focus on stellar first-quarter corporate earnings and an improving economy.

On Monday, the Dow Jones Industrial Average rose 186.14 points (+0.54%), the S&P 500 climbed 41.19 points (+0.99%), and the tech-heavy NASDAQ jumped 190.18 points (1.41%). In pre-market futures trading Tuesday, all three U.S. indices were extending their gains.

Global stocks have been rising as well, as national economies in most regions of the world pick up steam. You need to maintain a portfolio that’s properly diversified, not just among asset classes but among geographical regions as well.

Watch This Video: Investing Without Boundaries

While market participants are jittery, so far there aren’t clear signals that any of the major U.S. indices are preparing to turn bearish. Yes, valuations are high, but massive liquidity continues to shore up equities.

The New York Federal Reserve reported on Monday that the Fed’s balance sheet could reach $9 trillion by the end of 2022. But don’t overthink the Fed’s ultra-dovish monetary policy; just enjoy it while you can. (Below, I’ll pinpoint an “insurance policy” for your portfolio.)

Another plus for the stock market is the imminent advent of additional fiscal stimulus. Regardless of GOP opposition, President Biden’s $2.3 trillion infrastructure package is already set to pass through “reconciliation,” a budgetary procedure that only requires a majority vote in the Senate.

The stock market’s long hard climb…

For more than a year, Wall Street has gotten battered by shocking events. And yet, the relentless barrage of crises hasn’t fazed investors.

After the initial crash in February-March 2020 because of the coronavirus outbreak, the stock market has risen substantially higher, albeit with temporary dips along the way. As Dylan sang in Coming From The Heart (1978): “The road is long, it’s a long hard climb.” Take a look:

Despite the jarring news events of the past several months, the optimists (myself among them) maintained their existential faith in global capitalism. The bulls realized that the pandemic couldn’t last forever, and economic conditions were bound to get better amid unprecedented fiscal and monetary stimulus.

Now that the recovery is well underway, will the Federal Reserve spoil the party by taking away the proverbial punch bowl? Actually, it appears likely that we’re still following the template of years past, when the Fed stayed too accommodative for too long. In pursuing its “dual mandate” (i.e., maintain growth without stoking inflation), the U.S. central bank never quite gets it right.

Inflation is rising, but the beneficial results of stimulus abound. Initial jobless claims in the U.S. are back below pre-pandemic levels, the housing market is thriving, and consumer spending remains strong.

Despite the mounting criticism of inflation hawks, the Fed continues to stand pat. Bond investors have indicated that they don’t expect the first fed funds rate hike until December 2022. For its part, the Fed has vowed there won’t be a rate hike until 2023.

The upshot: This bull market probably has much further to run. In the meantime, it’s prudent to add portfolio protection. if you’d like to partake of the bull run but with a hedge against risks, I suggest you increase your exposure to gold. During crises and rising inflation, gold provides (as Dylan would put it) “shelter from the storm.”

For details about a gold play that’s poised to soar amid the conditions I’ve just described, click here now.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.