There is justifiable cause to worry that the inflation of assets is both unsustainable and dangerous. Twitter, bitcoin, etc. are trading at crazy prices. The recent rise in real-estate prices may simply be just another inflated asset class pumped up by the Federal Reserve. History should be the guide when assessing this possibility. Cheap money fuels speculation and bubbles begin to emerge. Many blame former Fed Chairman Alan Greenspan for the real-estate bubble. And some are grumbling Current Fed Chairman Ben Bernanke and the next Fed chief, Janet Yellen, are causing an asset bubble in equities.
There are some parts of the country where multiple offers are the norm and houses are selling for prices near the peak of the real-estate market in 2007. While this is surely not the case in all areas of the country, the recent increase in prices certainly has been eye-opening and is no doubt driven by an incredibly low interest-rate environment that cannot last. This concern applies to equity prices despite equities being fairly reasonably valued at this point with the PE ratio 15. Carl Icahn's latest warning about stock prices should bee heeded. Rallies don't last forever.
(Read more: Icahn warns of big drop in equities)
I'm not ready to say that equities are in a bubble phase but I suspect that art may have entered that territory and real estate in certain areas may be starting to stretch to that point. For that reason, participating in the run in assets (whether equities or other positions) requires a counterbalancing sober perspective on what can go wrong as well.
Being prudent and not being caught up in the euphoria is important.
As a hedge, I'd suggest taking some profits — we are. There's nothing wrong with cash. Invest in more cash-flow oriented global names with strong brand recognition. This is in keeping with our viewpoint that more conservative names can weather downturns better than more volatile positions. And don't be afraid to sell. Taxes aren't the worst thing in the world — it means you made a profit!
(Read more: What to make of the Fed minutes: El-Erian)
—By Michael A. Yoshikami
Michael A. Yoshikami is the CEO and founder of Destination Wealth Management in Walnut Creek, Calif. He is also chairman of the firm's investment committee.