What can advisors do to help investors break a cycle of buying high and selling low? Gauging a client's risk tolerance can be challenging. From 1997 to 1999, many formerly conservative clients were demanding that advisors allocate up to 100% of their portfolios to large-cap growth stocks. (Smart advisors pushed back and saved their clients some pain soon in the bust that followed.)

A decade later, clients were demanding that advisors scale back - or eliminate - U.S. equity holdings just as the market was about to hit bottom and rally. Now, investors are pouring money into equities they shunned four years ago.

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