This sell-down represents a shift for me. Over the last few months I have watched with some concern, but stayed bullish with my strategic allocation of 50 per cent in shares. Now, I have turned bear.

I have sold both New Zealand and international shares. The world is now so interconnected that, if there is a major crash, there is no obvious place to hide.

I have sold down because it appears to me that shares do not offer sufficient reward for the risk at the moment. At the moment, share prices are high both internationally and in New Zealand. It is difficult to imagine there will be any great rise from these quite high levels. At the same time as there appear limited gains on the horizon, risk is quite high. High prices and a lot of difficulty internationally (especially high and increasing debt in China) do not make for worry-free investment.

With limited upside potential and a good deal of downside possibility, lowering sharemarket exposure seems like a fairly good idea. I like to think I am following my #1 investment adage: buy in gloom, sell in boom.

In any event, there is not much cost to sell down. Some opportunity cost (potential lost gains if the markets rise), some brokerage and, of course, some egg on my face if markets sail merrily on. The proceeds from the sale will go to bank deposits. These will earn a pathetic amount of interest but I will suffer that knowing that, in the current climate, I am safer.

I think of selling as insurance. I pay a premium (possibly some lost returns and some brokerage) and I get to sleep better. I may also get to buy some cheap assets if there is a crash – in the event of a major fall, those bank deposits with their pathetic returns will be used to buy back in.

I am not sure that this will be a big crash (I am not even certain there will be a crash). I do not know whether the crash will last for long. Nevertheless, I am worried enough and think the risk is great enough that I will give up the returns from some of my shares and take cover until the clouds clear.

Martin Hawes is an Authorised Financial Adviser and his disclosure statement is available free of charge at www.martinhawes.com. This article is of a general nature and no substitute for personalised financial advice.