What Smart Investors Do Now
Market volatility often stirs up anxiety—especially for those nearing retirement or working toward time-sensitive financial goals. But for seasoned investors and advisors, these periods of uncertainty are nothing new. What sets successful long-term investors apart isn’t the ability to predict the next correction, but rather to manage risk proactively and position themselves to take advantage of opportunities when others are retreating.
“The essence of investment management is the management of risk, not the management of returns.”
— Benjamin Graham
Lessons from 25 Years of Market Cycles
Since I began working with clients in 1999, I’ve helped navigate through four major market downturns—each averaging over a 40% decline in the S&P 500. These weren’t just blips on the radar; they were gut-check moments that tested even the most well-constructed financial plans.
In each case, the market eventually rebounded—but often only after requiring a 75%+ gain just to recover previous highs. That’s why managing investment risk isn’t optional—it’s essential. Especially for clients approaching retirement, a significant downturn without proper risk mitigation can delay or even derail critical financial milestones.
Why Risk Management Matters More Than Ever
As AI-driven scams, geopolitical uncertainty, and inflation concerns jostle investor confidence, now is not the time to sit passively on defense. In fact, volatility can present an ideal moment to reassess your strategy, rebalance your portfolio, and—in the right cases—go on offense.
Here are four ways to take proactive steps amid market volatility:
1. Maximize Retirement Contributions (Early and Often)
If you’re able, consider front-loading your contributions to 401(k)s, IRAs, or employer-sponsored retirement plans. Investing during a market dip could position your dollars to capture more upside as the market recovers.
2. Consider Roth IRA Contributions or Conversions
Down markets may offer a unique tax advantage for Roth IRA conversions. By converting traditional IRA assets while account values are temporarily lower, you may reduce your tax liability on the converted amount—setting yourself up for future tax-free growth.
(Note: Always consult your CPA or tax advisor before initiating a Roth conversion.)
3. Reevaluate Your Allocation and Liquidity
Clients with a diversified allocation—including access to safer, more liquid investments—tend to weather downturns with greater ease. When quality assets go on sale, these investors are in a better position to buy, rather than sell out of fear.
4. Stress-Test Your Financial Plan
A solid financial plan isn’t just a roadmap—it’s a resilience test. We regularly review client plans to anticipate how a correction might impact both short- and long-term goals, making adjustments where needed to stay on track.
Embrace Cycles, Not Fear
It’s worth remembering that from 1980 to 2020, the S&P 500 saw an average intra-year decline of 13.7%—but still ended positive 75% of the time.¹ Volatility isn’t a sign of failure in the markets; it’s a sign of life.
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.”
— John Bogle
Understanding that cycles are part of the process helps you act rationally when others act emotionally. That’s why we focus on risk management at every stage of a client’s journey—building not just a portfolio, but a plan that can weather the inevitable storms.
Ready to Talk?
If recent headlines have made you uneasy, or you’re wondering how your current portfolio might hold up in the next downturn, we’re here to help. Let’s schedule a conversation to review your current plan and explore how to go on offense—strategically, patiently, and confidently.
Phone: 817-717-4400
Email: gerald@lightforcefinancial.com
Contact us: https://lightforcefinancial.com/contact-us/
This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website.
Past performance is not a guarantee of future results. Diversification and asset allocation do not ensure a profit or guarantee against loss. Registration with the SEC does not imply a certain level of skill or training.
Sources:
- STL.News – “Market History Supports Patience”
https://www.stl.news/stock-market-pullback-not-even-a-correction - CNBC – “Selling out during the market’s worst days can hurt you, research shows”
https://www.cnbc.com/2025/04/07/selling-out-during-the-markets-worst-days-can-hurt-you-research.html