As the S&P 500 delivered a 19.7% annualized gain over the past six years, talk of a market bubble has emerged.

Concerns of a bubble in prices are not just being voiced by perma-bears like Nouriel Roubini and “Dr. Doom” Marc Faber. Nobel laureate Robert Shiller also recently questioned asset prices in the second edition of his book, “Irrational Exuberance.”

For many investors, it’s tempting to think about locking in gains. While bull markets last an average 3.8 years, this one is already more than 50% longer. Selling stocks around their October 2007 highs would have protected a 119% gain since the 2002 low and avoided a 55% plunge in prices to 2009.

Where’s The Next Market Bubble?

Trying to perfectly time the eventual correction would be a folly, but investors can start taking profits in bubbly assets while positioning in less expensive investments.

Citigroup Research recently published a report, “It’s Bubble Time,” that measured valuations in the market and across sectors. The report found four themes that are driving bubbles in different assets and investments.

#-ad_banner-#First, they note the story of a “new normal” where low economic growth, inflation and interest rates continue to drive bond prices higher even as rates hover around historic lows. We have seen the new paradigm drive bond prices, as well as other cash yield investments like real estate investment trusts (REITs) and dividend-paying stocks, well into overvalued territory.

The report found that surplus liquidity, basically the wave of cheap money flooding the debt market and the economy through low rates, is also driving asset prices. The research noted that the weighted average global price of short-term money costs just 0.7%, the lowest in four decades.

A demand/supply imbalance for financial assets has been created from low rates and monetary stimulus programs. Central bank buying of bonds and corporate share repurchase programs are competing with investors for financial assets, creating a lot of demand for limited assets.

The fourth driver in asset prices comes from asset managers, whose jobs depend on “beating” their index. Portfolio managers must stay invested in the market even as valuations climb to make sure their performance doesn’t lag.

Out Of Bubbles And Into Value

Longer-term bonds appear to be the only asset class that is clearly in a bubble with the iShares 20+ Treasury Bond (NYSE: TLT) off its January spike, but still high relative to the historical average. The bond fund has increased at a compound annual rate of 9% over the last five years. Those kinds of strong and ongoing gains are quite unusual.

Citi measured valuations of major asset classes and scaled them on the basis of how many standard deviations their current valuations are from the historical average.

Measuring a bubble as two deviations against the average, Citi found four bond classes at or near bubble levels. The valuation on 10-year U.S. Treasuries did not quite make the definition of a bubble at one deviation, but is still relatively expensive.

Crude oil stood out as decidedly un-bubbly with prices two standard deviations below the average, followed closely by base metals and emerging market stocks.

Within stocks, the report found an emerging bubble in retail and consumer goods, while banking and energy stocks represent the best relative value. The fact that stocks of consumer goods companies are richly valued should not come as a surprise with investors fleeing fixed income in search for yield and bidding up dividend stocks.

What To Avoid

Despite slow wage growth, shares of retailers have jumped and collectively trade at a price of 28.7 times trailing earnings, according to Morningstar data. Within the group, Under Armour, Inc. (NYSE: UA) trades for 84 times trailing earnings with only 13.8% earnings growth expected this year.

Expected sales growth of 24% this year is attractive, but the retail athletic market is relatively mature and competition limits profitability. The company only books $0.06 of every dollar in sales as net income, meaning it will have to do more than just boost sales to justify such a high valuation.

Hyatt Hotels Corp. (NYSE: H) trades for 54 times trailing earnings, even after missing Q1 earnings expectations by 42%. Analysts expect full year earnings growth of just 7%. The company is expanding internationally, but weak global economic growth has limited revenue growth.

Even as economic growth continues to support the travel and lodging sector, it could take years for earnings to catch up with the valuation. Shareholders have little say, as the Pritzker family controls 58% of shares and 75% of voting rights.

What To Buy

As noted, banking stocks are currently a relative bargain: they are valued at a slight discount to the broader market and could benefit from interest rate increases next year, which will improve net interest margins.

Within the space, U.S. Bancorp (NYSE: USB) trades for a price-to-earnings ratio of 14.1 times trailing earnings, with 4.9% earnings growth expected this year. Strong fee revenue has helped the bank grow despite weak net interest margins. The slow recovery in housing should continue to benefit the bank, which operates in 25 states.

The fact that energy is relatively cheap should not be a surprise either. The selloff in oil prices and the sector took good companies down along with the bad. ONEOK Partners LP (NYSE: OKS) reported a 17% drop in Q1 EBITDA to $324 million versus the same period last year. Management’s guidance for up to $1.26 billion in distributable cash flow covers the trailing 7.6% distribution yield and leaves room for an increase.

The company has made strategic expense cuts and is positioning toward natural gas liquids for future growth. While other players in the Bakken struggle, ONEOK has the fundamentals to survive and profit when oil prices recover.

Risks to Consider: As Citi’s analysts note, it has taken as many as three rate hikes for bubbles to pop in the past. This could mean that it will be well into 2016 before stock valuations return to historical levels.

Action To Take –> Watch out for bubbly sectors like retail and consumer goods, as well as bonds in general. Position in value sectors like energy and banks to protect your portfolio from the next bubble crisis.

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