The pullback is here.

The market is starting to cool off, which isn’t surprising. With increasing distribution days, leading stocks starting to give back, and risk-on assets under pressure, it adds up to the setup for a market correction. This pullback was very much expected and also matches the seasonal patterns I’ve mentioned before.

On top of that this week’s Fed meeting is an important one. Most investors already expect rate cuts to begin in September, but the Fed’s guidance will likely decide how the market moves from here.

Tech names such as the Nasdaq and ARK are leading the pullback, while the S&P 500 is only slightly down and without the Mag 7 it’s even flat. That looks more like healthy rotation than panic selling.

The market has climbed almost without pause this year. A pullback is actually welcome. It creates opportunities - a second chance to position into leading companies that you might have missed earlier.

There’s no reason to believe that this bull market is over.

But it definitely does not hurt to be cautious in the near term.

The focus now should be on managing risk. When the market starts to correct even a little, momentum stocks are usually hit the hardest. The goal is to give back as little of your hard-earned profits as possible. So make sure to keep your portfolio exposure under control.

Here are a few ways to do that:

1. Cut losses early. You don’t want to hold too many losing positions, especially at the start of a correction. Nobody knows how long a pullback will last. That’s why you need to be even more disciplined.

2. Hold enough cash. A pullback can create new buying opportunities. But you can only take advantage of them if you have cash available.

3. Clean out your portfolio. You want to constantly prune your portfolio. Keep the strongest. Get rid of the weakest.

4. Reduce exposure to momentum names. They are the most vulnerable names in a correction.

5. Hedge your portfolio: This is a more advanced strategy and not suitable for everyone. If you know what you are doing, you can use short positions, inverse ETFs, or volatility instruments to help manage drawdowns.

Even if this isn’t the start of a bear market but just a normal correction, it can still be painful if you’re not prepared.

So, I’ll be doing exactly that to prepare. Raise cash. Reduce exposure to riskier names. Get rid of weak names. And cutting losses earlier.

I’m aiming to bring my portfolio exposure down to about 70–80%.