Topic: Portfolio Management

Uncertainty has always been part of investing. Every market environment brings its own set of unknowns, which is why a Fidelity portfolio manager recently observed that “uncertainty is the new certainty.”

Judging by the market’s reaction to potential new tariffs involving the EU and Greenland, 2026 is no exception, even if that particular development wasn’t on your bingo card to start the year. This is especially true at a time when the broader economic outlook remains strong in many respects.

Periods of volatility can be uncomfortable, and some investors respond by selling in haste. We take a different view. Market pullbacks provide opportunities to pick up equities at temporarily reduced prices, and the long-term horizon allows investors to take advantage. 

As the chart illustrates, history supports this approach. Since 1929, the probability of experiencing negative returns over a 10-year period has been just 6%. The longer one owns stocks, the lower the likelihood of a loss — declining from 46% over a single day to just 6% over a decade. Time in the market remains one of the most powerful tools investors have.

Time Horizons and Equity Losses

Probability of negative returns based on S&P 500 total returns, 1929-present

What Many Wealth Firms Avoid Saying Clearly

Long-term investment outcomes are driven far more by client behavior than by market conditions. Many wealth firms hesitate to say this plainly because it can be uncomfortable. But the reality is simple: Clients who stay disciplined and follow their investment team tend to succeed, and those who frequently override strategy tend to undermine results.

Discipline, Not Drama, Builds Wealth

The majority of investors do this right. Most of our clients do. They understand that disciplined, professional portfolio management — not constant reaction to the day’s headlines — is what creates long-term success.

But a small percentage of clients and investors don’t.

• They want to override the process.
• They try to force market timing.
• They react to news, politics, and short-term noise.

And when results suffer, they look for something else to blame. This is where most firms stay silent. We won’t.

Market Timing Is the Fastest Way to Break Compounding

Trying to time the market is not a sophisticated strategy. It’s a gamble that requires two perfect decisions: when to get out and when to get back in.

Very few people make the second decision well. They exit “until things feel better,” watch markets rise, hesitate, then wait for the pullback that never feels safe enough or think that they can’t get back in at a higher level than where they sold.

Meanwhile, compounding keeps moving without them.

Headlines Are Not Signals

Another thing most firms won’t say is that if your portfolio decisions are driven by the news, you’re already late. We hear it constantly:

“Why aren’t we buying this after the announcement?”
“Why didn’t we react when politics shifted?”
“Why aren’t we chasing that story?”

Here’s why: Professional investing does not chase headlines. Markets digest information instantly. Portfolios are built through positioning, not reaction. Acting after the fact adds risk, not insight.

As Wayne Gretzky famously put it, “I skate to where the puck is going to be, not where it has been.” That principle is foundational to how disciplined investing works.

The Vegas Effect: Stories Without Receipts

Here’s another uncomfortable reality: Many people who claim they’re outperforming on their own can never quite produce the full record.

It’s the same phenomenon you see in Las Vegas. Wins get remembered. Losses get discounted. Missed opportunities never make the story. If results were truly consistent and repeatable, transparency wouldn’t be an issue.

The handful of people who can successfully manage their own money over decades does exist, but they’re disciplined, unemotional, process-driven, and rare.

Selectivity Is a Strength, Not a Weakness

Every year, we review our client relationships intentionally — not to judge performance, but to confirm alignment. When a client repeatedly overrides strategy, forces market calls, and then assigns blame for outcomes driven by those decisions, that’s not a market problem.

It’s a fit problem. The discipline required for long-term success wasn’t being followed.

Most firms avoid conversations like this. We don’t. A disciplined investment process only works when it’s allowed to work.

What Actually Works Over Decades

The clients who succeed over the long haul share common traits:

• They stay invested through cycles.
• They allow professionals to manage the portfolio.
• They accept volatility as part of the process.
• They avoid emotional overrides.

That’s how results compound over decades, not months or days.

The Bottom Line

Let’s rip the Band-Aid clean off: Working with wealth management firms and advisors but refusing to follow their guidance defeats the entire purpose.

If you want to build lasting wealth, you don’t need to predict markets. You need discipline. You need consistency. You need to stay in your lane. Most investors who do this succeed, and for the few who won’t, honesty matters more than comfort.

The CD Wealth Formula

We help our clients reach and maintain financial stability by following a specific plan, catered to each client.

Our focus remains on long-term investing with a strategic allocation while maintaining a tactical approach. Our decisions to make changes are calculated and well thought out, looking at where we see the economy heading. We are anticipating and moving to those areas of strength in the economy and in the stock market. 

We will continue to focus on the fact that what really matters right now is time in the market, not out of the market. That means staying the course and continuing to invest, even when the markets dip, to take advantage of potential market upturns. We continue to adhere to the proven disciplines of diversification, periodic rebalancing, and forward-looking strategies, while avoiding reliance on stale retrospective data.

It is important to focus on the long-term goal, not on one specific data point or indicator. Long-term fundamentals are what matter. In markets and moments like these, it is essential to stick to the financial plan. Investing is about following a disciplined process over time.

Sources: Bank of America, Fidelity

Over the weekend, U.S. officials announced the capture of Venezuelan President Nicolás Maduro and his wife, who were transported to New York to face charges related to drug trafficking and narco-terrorism. The events that unfolded in Venezuela could lead to instability in the markets to start the year. As always, we caution you against making knee-jerk decisions or reactions to breaking news.

History suggests that markets tend to digest geopolitical shocks over time, as the chart below illustrates, and we believe equity markets should look through the headlines and focus on the long run. Venezuela is a small global player, but it does have the highest proven oil reserves, according to OPEC. The infrastructure to harvest those reserves is limited, however, and it is premature to lay out a long-term assessment of the oil market based on last weekend’s developments.

How Markets Have Responded to Major World Events

This view of how the S&P 500 Index responded after geopolitical shocks shows that over time, markets tend to adapt and refocus on economic fundamentals. In about two-thirds of cases, markets were higher a year after the event, even when the initial reaction was sharply negative.

Looking Back at 2025

Last year was a strong one for investors, as stocks made new highs around the world, and bonds had their best year since 2020. Commodities gained overall, with gold and silver soaring to new highs. Bitcoin and oil were the two major assets that had negative returns.

As a reminder, it wasn’t always smooth sailing in 2025. Between mid-February and early April, the S&P 500 suffered a near bear market (down 19% at the low point). The NASDAQ and the Russell 2000 both fell 24% during that same timeframe.

Since the closing low on April 8, the market had a great rally and closed in higher double digits for the third consecutive year. But even then, the line wasn’t straight up, as both the NASDAQ and Russell 2000 experienced almost 10% pullbacks after April 8, and the S&P fell 5%. Only two of the Magnificent Seven stocks — Alphabet and Nvidia — outperformed the S&P. The other five underperformed both the S&P and the NASDAQ. International Equities dominated U.S. stocks, driven by a decline in the dollar and attractive valuations outside of the U.S.

Last year’s returns were driven by earnings growth and profitability, a sturdier foundation for stocks than just multiple expansion. In 2025, earnings growth drove 79% of the S&P 500’s return — up from 55% in 2024 and 27% in 2023, when the Magnificent Seven drove most of the returns.

Growth broadened last year, with financials, utilities and materials enjoying double-digit profit growth. All 11 sectors of the S&P 500 saw positive returns, with real estate achieving the lowest performance.

What’s Driving Market Returns?

In the last three years, earnings growth has eclipsed multiple expansion as the main contribution to S&P 500 returns.

Looking Ahead to 2026

No one knows what will happen in the stock market this year. We do know that there will be bad days and scary headlines — such as the latest Venezuela news in just the first week. Market outlooks are good exercises as we try to predict the market, the economy, and what the new year may look like, but market dynamics don’t follow the calendar.

Some economic themes like artificial intelligence remain strong, but they change in complexion as AI continues to mature and grow. Other themes like tariffs, inflation, housing supply, profit margins, labor supply altered by immigration shifts, and interest rates continue to be top of mind for economists and market predictors.

Inflation remains persistent as both tariffs and labor shortages push costs higher. We also don’t know if the One Big Beautiful Bill will stimulate consumers and businesses or what effect it may have on the market.

As the chart below shows, 2026 predictions for the S&P 500 range from a low of 7,100 to a high of 8,100. The average of the top banks’ predictions is 7,663, which would imply an almost 12% gain for the year. On the low end, the predicted return is 3.73%, and on the high end, it is over 18%.

These estimates will change throughout the year, with economists updating their predictions based on current events and fluctuations. These same strategists were bullish heading into 2025 but later cut their forecast around Liberation Day, only to readjust it after stocks began to take off.

Wall Street’s Predictions for the S&P 500

The CD Wealth Formula

We help our clients reach and maintain financial stability by following a specific plan, catered to each client.

Our focus remains on long-term investing with a strategic allocation while maintaining a tactical approach. Our decisions to make changes are calculated and well thought out, looking at where we see the economy heading. We are anticipating and moving to those areas of strength in the economy and in the stock market. 

We will continue to focus on the fact that what really matters right now is time in the market, not out of the market. That means staying the course and continuing to invest, even when the markets dip, to take advantage of potential market upturns. We continue to adhere to the proven disciplines of diversification, periodic rebalancing, and forward-looking strategies, while avoiding reliance on stale retrospective data.

It is important to focus on the long-term goal, not on one specific data point or indicator. Long-term fundamentals are what matter. In markets and moments like these, it is essential to stick to the financial plan. Investing is about following a disciplined process over time.

Sources: Carson, CNBC, DealBook, Goldman Sachs, S&P

The current bull market turned 3 years old on Oct. 12. In October 2022, the S&P 500 was down more than 25% from its peak. Tech stocks had been cut in half, and soaring interest rates dragged down both stocks and bonds by double digits.

History shows that bull markets tend to last. Since World War II, there have been 11 of them, with an average lifespan of just over five years. We’re only three years into the current one, and it’s already up about 90%. That may sound like a lot, and it’s fair to ask how long it can continue. Statistically, though, the average bull market since WWII has gained more than 190%. By that measure, this one could keep on trucking.

Bull Markets Last Longer Than You Think

Length of bull markets in months and when they started

Pundits often repeat, “Buy low, sell high,” and skeptics warn that what goes up must come down. But history tells a different story. All-time highs typically have been followed by significant selloffs. In fact, markets have often delivered better-than-average returns after reaching new highs.

Stocks typically make new highs when the economy and corporate earnings are strong, and those conditions don’t vanish overnight. Since 1950, the S&P 500 has returned an average of 12.7% in the year following an all-time high.

To be clear: History suggests that reaching new heights isn’t a signal to worry. It’s often a sign of continued strength.

So why not sell your stocks and sit on the sidelines?

1. Timing the Market Is a Mirage: The idea that investors can move to cash and re-enter at lower levels sounds rational, but it rarely is successful. The market’s biggest gains tend to cluster in just a few unpredictable days. Missing even a few of those days can sharply reduce long-term returns.

Hypothetical Growth of $10,000 in the S&P 500 Index

Jan. 1, 1988-Dec. 31, 2024

2. Recent Evidence — 2025 in Real Time: We just saw this unfold recently. Stocks pulled back from early February through early April, then rebounded quickly. Many investors who “played it safe” by stepping aside missed the sharp recovery. Those who stayed invested captured the full rebound and are now benefiting from new highs.

3. Highs Are Normal, Not Worrisome: The market spends most of its life near record levels because earnings, innovation and productivity grow over time. A new high doesn’t mean we’ve hit a peak; it often signals continuing resilience and progress.

4. The Real Risk Is Emotional, Not Economic: Acting on headlines or fears of a bubble often leads to short-term decisions that undermine long-term fundamentals. The discipline to stay invested through cycles is what separates strategy from speculation.

5. Perspective for Clients: Instead of asking, “Should I wait for the market to drop?” the better question is, “Is my portfolio aligned with my goals and time horizon?” If the answer is yes, then the winning move is staying invested. History shows that trying to “wait for the drop” almost always backfires.

Markets are always forward-looking, and while past performance never guarantees future results, history still offers perspective. Even amid uncertainty — including the current government shutdown, now the longest full shutdown in U.S. history — several strong tailwinds continue to support market strength:

1. The Fed and Interest Rates: The market is predicting five rate cuts before the end of 2026. This has historically provided a boost for profits and stock gains.

2. Momentum: The market has had several months of strong returns, and earnings expectations for the fourth quarter remain positive.

3. Spending: Investment in artificial intelligence, along with consumer demand and corporate balance sheets, remains strong.

Every market cycle includes new highs, temporary declines and renewed growth. Long-term investors don’t need to predict the next dip — they just need to participate and stay invested for the long run.

The CD Wealth Formula

We help our clients reach and maintain financial stability by following a specific plan, catered to each client. 

Our focus remains on long-term investing with a strategic allocation while maintaining a tactical approach. Our decisions to make changes are calculated and well thought out, looking at where we see the economy is heading. We are not guessing or market timing. We are anticipating and moving to those areas of strength in the economy — and in the stock market. 

We will continue to focus on the fact that what really matters right now is time in the market, not out of the market. That means staying the course and continuing to invest, even when the markets dip, to take advantage of potential market upturns. We continue to adhere to the tried-and-true disciplines of diversification, periodic rebalancing and looking forward, while not making investment decisions based on where we have been.

It is important to focus on the long-term goal, not on one specific data point or indicator. Long-term fundamentals are what matter. In markets and moments like these, it is essential to stick to the financial plan. Investing is about following a disciplined process over time.

Sources: Carson, Fidelity, CNBC

After unpredictable trade policies and multiple wars, who would have thought global stock markets would be this strong through the end of August? Emerging market stocks are having their best start since 2017 — despite U.S. tariff announcements — and a weaker U.S. dollar has aided global equities.

In the past, a softer U.S. dollar has signaled reduced global risk aversion, moving investment dollars into other countries. While U.S. markets are having a great year, international equity returns are in some instances two to three times the S&P 500 returns.

This raises the question: Should I invest only in the S&P 500?

The answer is no. Chasing the best-performing asset class year after year is nearly impossible, and one year’s winners often are the next year’s losers.

While international stocks have trailed the U.S. for many years, the chart below demonstrates exactly why we maintain international equity exposure. History tells us that outperformance rotates between U.S. and international markets over time, not favoring either one exclusively. A globally diversified portfolio can help spread risk and positions the portfolio to benefit from shifts in market leadership.

Major Country Equity Performance in 2025

Year-to-date equity total returns

Here in the U.S., the S&P 500 ended August higher, its fourth consecutive monthly gain, and has rallied about 30% from April lows. This year was the first time since 1950 that August saw higher equity returns during a president’s second term.

This summer will be remembered for a strong rally, with the index up 9.3% from June through August. Historically, the rest of the year has seen positive returns when this has happened (excluding the market crash of 1987), with an average return of 5.6% for the remainder of the year.

A Big Summer Rally Usually Is Bullish

Top 10 S&P 500 returns, June-August (1950-present)

For decades, September has been the weakest month for the S&P 500 — but the so-called September Effect is a pattern, not a guaranteed outcome. Since 1950, the index has averaged a -0.68% return and has been positive only 44.9% of the time in September, the lowest of any month.

There are several theories that seek to explain the weakness in September. The first is investor psychology: This historical trend can become a self-fulfilling prophecy, as a sense of weariness can lead to selling. Also, as the third quarter ends in September, institutional investors often rebalance and relocate, which may lead to downward selling pressure. Market uncertainty also could arise as Congress comes back into session this month and the fiscal year-end deadline arrives Sept. 30.

Meanwhile, the Fed continues to face an inflation problem but is still planning on cutting interest rates, and markets are expecting six rate cuts by the end of 2026. The number of rate cuts has grown while recession odds have fallen, and inflation remains sticky. If the Fed were to reduce rates as much as is currently priced in, that would be bullish for stocks. 

September Is the Worst Month of the Year

S&P 500 monthly rank (1950-2024)

For long-term investors, the September Effect is not a reliable indicator. We are not making short-term decisions based on how one month has performed historically. It is useful to be aware of the historical trend, but it is not a reason to deviate from the long-term strategy; reacting to it can cause investors to miss potential gains.

The key is to focus on broader macroeconomic factors, such as interest rate changes, earnings and health of the economy. For those with excess cash, September may provide an opportunity to put it to work into the market through dollar-cost averaging.

The CD Wealth Formula

We help our clients reach and maintain financial stability by following a specific plan, catered to each client. 

Our focus remains on long-term investing with a strategic allocation while maintaining a tactical approach. Our decisions to make changes are calculated and well thought out, looking at where we see the economy is heading. We are not guessing or market timing. We are anticipating and moving to those areas of strength in the economy — and in the stock market. 

We will continue to focus on the fact that what really matters right now is time in the market, not out of the market. That means staying the course and continuing to invest, even when the markets dip, to take advantage of potential market upturns. We continue to adhere to the tried-and-true disciplines of diversification, periodic rebalancing and looking forward, while not making investment decisions based on where we have been.

It is important to focus on the long-term goal, not on one specific data point or indicator. Long-term fundamentals are what matter. In markets and moments like these, it is essential to stick to the financial plan. Investing is about following a disciplined process over time.

Sources: Bloomberg, Carson, CNBC, A Wealth of Common Sense, JP Morgan