Markets are rising despite a growing list of risks. What to do?

The stock market has continued to reach new highs, troubled only fleetingly by rising interest rates, sluggish corporate earnings and new and uncomfortable political realities.

Monetary policy is tightening, government spending is expected to expand substantially, and, as the U.S. presidential election and the vote in Britain to leave the European Union show, trade relations and other ties among nations may be fraying. How those trends progress should go a long way to determining the performance of stocks and bonds as the year moves along.

These aren't the only issues for investors to contend with, either. Economic indicators have perked up but the earnings outlook remains subdued, stock valuations remain high and bond yields are low but rising. Under these circumstances, many investment advisers recommend taking only minimal, reasonably priced risks.

"I'm hard pressed to locate any investment where you can make a strong argument that it's undervalued," said Joe Davis, global chief economist at Vanguard. "Just as the economic environment seems to be improving, the investment environment is more challenging. Investors have more risk in their portfolios than at any time since 1999."

Ben Inker, co-head of asset allocation at the GMO investment firm, likewise finds "plenty of things to worry about."

The Standard & Poor's 500-stock index is trading at about 26 times the earnings that the constituent companies reported in the previous year, higher than at almost any time in history. One reason investors are willing to pay so much is that they see even less value in other assets.

"The rest of the world looks scarier than the U.S.," Inker said. "Who would want to touch Europe? Who would want to touch emerging" markets? As scary as they may appear, he recommends investing in emerging stock markets as the best of a series of difficult choices.

"The general trend of government policy will be pretty pro-business and much more friendly to the U.S. corporate sector than it has been," he said. But he said that "the Republicans may get sidetracked by antitrade rhetoric."

President Donald Trump has proposed raising tariffs on imported goods, and some Republicans in Congress have proposed changing corporate tax rules to reward exporters and punish importers. Economists generally agree that higher tariffs reduce competitiveness and drive up prices of imported goods, including parts supplied to U.S. manufacturers.

Kelly is also wary of Trump's pledges to increase government spending on infrastructure projects since it would likely increase debt and inflation.

And we may have higher interest rates, too. The Federal Reserve raised rates in December, only the second time in a decade. Kelly expects three, possibly four, increases this year.

The more forbidding rate environment may account for much of the run-up in bond yields last year. Bond funds lost 1 percent in the fourth quarter, depressed by the 11.8 percent plunge in portfolios that specialize in long-term government issues. For the full year, according to Morningstar, the average bond fund was up 5.9 percent, helped by double-digit gains in riskier categories like high-yield and emerging market debt.

"It's hard to buy things after eight years of a credit cycle," Landmann said. "Wait for it to turn; that's the discipline of being a value investor."

When considering any benefits of spending measures introduced by Trump and Congress, it's important to remember that they wouldn't be spread far and wide. Hope that the global recovery might at last get some legs helped emerging stock markets last year, but they gave back about seven months' worth of gains in the week after the election, as investors weighed the prospect of Trump's protectionist campaign language being translated into action.

The average emerging market stock fund lost 5.5 percent in the fourth quarter but still gained 9 percent for the year. International stock funds overall fell 2.8 percent in the quarter and rose 4.9 percent on the year.

Davis, at Vanguard, advised investors to make sure they are globally diversified and not overly dependent on American markets. He also encouraged them to expect less. "One risk for equity markets for 2017 is they are pricing in 4 percent economic growth," he said. "I think that's unlikely; they seem to be discounting risks to free trade."