Redeem Financial Group

Market volatility is often framed as something investors must endure.

But it can also be something investors use.

When markets decline, several planning opportunities can appear:

Rebalancing portfolios.
Tax-loss harvesting.
Roth conversions.
Putting available cash to work.

None of these eliminates volatility.

But they can help turn periods of uncertainty into moments of action rather than reaction.

The two hardest things to do as an investor:

1) Sell an asset that’s been going up.
2) Buy an asset that’s been going down.

Both feel wrong every time, but this is what “buying low and selling high” is all about.

While doing this on any given day may seem incredibly difficult on the surface, a systematic rebalancing approach can do this for you without you having to make a single buy or sell decision.

And when done consistently across decades, rebalancing has historically been a meaningful source of returns.

When the market is hitting new highs on a regular basis, many investors tend to get wary about putting money to work, and might even consider getting out of the market for a while.

They think “the market is too high” is a prudent reason to sell.

When faced with this decision point, there’s a quote (paraphrased) that I return to again and again from Nick Murray in response. Mr. Murray said,

“If you think the market is too high right now, wait 20 years.”

One look at a long-term chart of the market and you will find the truth of this quote to be self-evident.

Imagine you’ve just been told a major market drawdown is coming. You don’t know exactly when, just sometime in the next few years. You also don’t know how bad; it could be 20%, or 50%. You just know it’s coming.

Now imagine you have to design your portfolio with that information in hand. What would you do? You can’t very well sell out of the market, because the decline could be a few years off, which could cause you to miss out on some incredible gains in the meantime. But you can’t do nothing either.

A few questions you’d probably want an answer to: How much money will I need to live on during the drawdown? How long should we expect the bear market to last? If I had to sell something during that period, what would I be willing to sell?

These are the exact questions a thoughtful portfolio process is designed to answer before a drawdown ever arrives, and they deserve answers.

Because here’s the thing. We know a decline is coming. Bear markets are common. While we’ve been enjoying a long bull market for quite some time now, historically, we should expect a bear market about once every four years.

We just can never know the timing. This gets to the heart of why short-term assets matter.

They are our source of liquidity when the big, bad (but historically temporary) bear market shows up. They provide us with the confidence to ride out declines and uncertainty.

In other words, they “create the conditions for patience to exist” when patience is what is most needed.

I’ve sat across from a lot of investors over the years who had a firm opinion about which funds to own.

They’d done their homework. Read the reports. Compared the track records.

And then I’d ask them: How much of your portfolio is in equities vs bonds?

Sometimes there was a long pause.

The truth is, most people put enormous energy into the small decisions and almost none into the one that actually drives their results.

Benjamin Graham called asset allocation — that is, how you divide your money between stocks and bonds — the most important decision of your investing lifetime.

That’s a big claim. But here’s what backs it up.

A 1986 academic study examined the returns of major pension funds and found that 94% of the difference in long-term performance came from asset allocation alone.

Not the managers. Not the funds. Not the timing. Just the mix.

When I share that number with clients, the reaction is usually the same.

Surprise, followed quickly by a kind of relief. Because it simplifies things.

You don’t have to find the best fund. You don’t have to predict what the Fed is going to do. You don’t have to be smarter than anyone.

You just have to get the big decision right — and then have the discipline to stick with it.

Your allocation should be built around your goals, your timeline, and your willingness to endure your portfolio moving up and down. Those things are personal. There’s no universal right answer.

But there is a universal wrong answer: ignoring the question entirely while obsessing over everything else.

The mix matters more than the minutiae.

Graham knew it. Bogle confirmed it. The data backs it up.

Start there.

“The stock market is a giant distraction from the business of investing.” — John Bogle

The market is literally engineered to hijack your attention:

Prices update millisecond by millisecond.

Headlines panic-react to every single tick.

Pundit opinions scream at you 24/7.

It creates a toxic psychological trap: “Don’t just sit there, DO something!”

But here is the hard truth about wealth creation: Successful investing has never been about reacting to the market.

It’s about:

Buying fractional ownership in productive businesses that solve real problems.

Leaving them alone so they have the time to actually grow.

The market’s entire job is to make patience feel uncomfortable—and sometimes, downright foolish.

But if history has taught us anything, it’s that the loudest voices rarely make the most money. Patience pays dividends. Eventually.