It appears unlikely that the Federal Reserve will raise rates at its meeting next month, shortly before the election.

But it may well do so in December, leaving investors for the moment to ponder how to position themselves amid a stock market that has been spurred to all-time highs — and may be nearing a top — in large part on easy monetary policy.

Prolonged low interest rates have given legs to the stock market’s bull run. They have contributed to all-time highs as companies have used cheap financing to buy back shares and investors have piled into equities in search of yield because bonds are earning very little.

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The Fed wants to hike rates to help diminish distortions that ultra-low rates have on the market and to have a policy tool if they end up needing to lower rates again, says Adam Watts, managing partner with EAM Partners. Also, Fed officials have what Watts calls a “credibility problem” because they have been talking about raising rates without actually doing so.

The Fed’s last hike was in December, the first rate increase in nearly a decade.

Watts doesn’t think the Fed will make a move in November because of increased market uncertainty surrounding elections.

In addition to proximity to the election, economic data such as employment, GDP growth and relatively tame inflation mean an increase in November would be surprising, says Wayne Schmidt, chief investment officer at Gradient Investments.

But the market is expecting a 25 basis points hike in December, Schmidt and Watts say.

Stocks will likely react negatively to an increase initially but will probably experience a short-term dip if further hikes aren’t expected soon, Schmidt says. But the dip could be prolonged if market participants see multiple increases in relatively quick succession, he says.

In terms of the November Federal Reserve meeting, Schmidt says there aren’t any portfolio adjustments investors need to make. But considering the overall stock market valuation, near all-time highs as measured by the Standard & Poor’s 500 index, it may well be time to take some money off the table ahead of a potential pullback, he says.

It may make sense to take some risk out of a portfolio by exchanging some stocks or high-yield bonds for cash or perhaps selling some aggressive emerging market stocks and bulking up on blue chips, Schmidt says.

Investment grade bond exchange-traded funds could also be an option, he says.

Then, see if there is a buying opportunity between now and February. Bargain hunting could come if the market pulls back 5 to 10 percent, Schmidt says.

“Lightening up would be prudent even if it continues to go up,” he says. “I’d rather make that move when we’re approaching all-time highs. Get on the right side of the cycle.”

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Watts expects stock market volatility between now and December with upcoming U.S. and European elections and the December Fed meeting. He recalls market gyrations after last year’s interest rate increase when investors thought more tightening would follow.

There are various strategies investors can use.

Diversification is important, Watts says. It can’t be simply moving money into international stocks because those will struggle in a rising dollar environment that would be likely if the Fed raises rates, he says.

Holding stocks and bonds in different sectors should be combined with alternative investments, he says. These include long and short strategies such as those provided by managed futures mutual funds and ETFs that have the ability to go long or short in a diversified basket of stocks, bonds and currencies.

Watts also advocates products that utilize volatility management to reduce exposure when stocks are swinging wildly.

For a typical portfolio consisting of 60 percent stocks and 40 percent bonds, such a strategy could end up reducing stock holdings to 50 percent and bonds to 30 percent, with the remainder allocated to alternative investments, he says.

“Everybody’s waiting for when is this going to correct,” says Greg King, CEO of REX Shares, which offers gold-hedged equity exchange-traded funds.

For investors with long-term allocations in equities, King believes it is sensible to hedge some of that with gold. In case of a pullback, he says gold can be a decent hedge, and as a long-term investment, the precious metal has a positive correlation with inflation.

Low interest rates have been good for gold because of the lower opportunity costs of investing in the metal, which doesn’t pay interest. However, King notes that if rates go up, storing money in fixed income investments would become more attractive.

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Further, rising interest rates decrease the threat of inflation, Watts says. That would also be a headwind for gold because it is considered a hedge against inflation.

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How to Invest Ahead of a Federal Reserve Interest Rate Hike originally appeared on usnews.com