A woman in her 60s stands on a covered porch with a mug, looking out at the rain before responding to what has changed.

A steadier way to think about market highs and lows

Ross Marino |
Categories
Investments
Retirement Income
Risk Management

A market headline can change how the same portfolio feels. A new high may make risk seem less pressing. A sharp decline may make a long-term plan feel less settled, even when your spending needs and retirement goals have stayed the same.

The useful question is what would actually change if you responded today. A steadier answer begins with the structure already supporting your life: when you expect to use the money, how much must remain available, and how much investment risk the plan is designed to carry.

What should your plan show before you react?

Start with time. Money expected to support the next few years has a different job from money intended for much later in retirement. That distinction matters because a decline has a different consequence when a withdrawal is approaching than when the assets may remain invested for many years.

Then compare your current allocation with its target. Market gains can leave a portfolio carrying more stock exposure than planned. Declines can leave growth assets below their intended range. Asset allocation and rebalancing provide a way to manage those shifts without first predicting the market’s next direction.[1] Your appropriate mix still depends on your goals, time horizon, and willingness and ability to accept loss.[2]

How should a market move travel through the plan?

The headline starts the review. The plan determines the response.

1 Market move: prices rise or fall.
2 Plan checks: Did the risk mix leave its target range? Did spending needs or timing change?
3 Possible response: rebalance, revise near-term funding, or continue the existing cadence.
The portfolio action follows the plan check, rather than the intensity of the headline.

This order creates a useful separation. A market move may justify a review. It does not automatically establish which action fits your life or your portfolio.

Dovetail Principle: The Numbers Should Clarify the Decision, Not Promise the Future

A defined investment range, spending structure, and review cadence give new information somewhere to go. They help distinguish a change that calls for action from volatility the plan was built to absorb.

How does rebalancing keep risk connected to your life?

Rebalancing trims investments that have grown beyond their target and adds to areas that have fallen below it. When it follows a schedule or predetermined range, the decision is tied to the risk you chose rather than a forecast about the next market turn.[1]

That connection matters in both directions. After a strong run, rebalancing may reduce exposure that now exceeds the plan. After a decline, it may restore growth assets within the agreed range. FINRA also cautions that market timing can lead investors to miss recoveries or other opportunities while they wait outside the market.[3]

Why is finding the right market forecaster an incomplete answer?

The temptation to react can become a search for a manager who will make the moves at the right time. The evidence makes that a difficult foundation for a retirement plan. The SPIVA U.S. Year-End 2025 Scorecard reported that 79% of active large-cap U.S. equity funds underperformed the S&P 500 during 2025.[4]

Some managers will outperform over particular periods. The planning concern is whether your future withdrawals can depend on identifying them in advance and at the right time. Morningstar tested valuation-based timing approaches and found that staying fully invested generally produced better results than moving in and out of stocks.[5]

Why do market declines matter differently when withdrawals have begun?

A decline near the start of retirement can have a larger effect when portfolio withdrawals require assets to be sold at lower prices. Those sales leave fewer assets available to participate in a later recovery. Vanguard identifies this sequence risk as especially relevant around retirement, when market losses and ongoing withdrawals can interact.[6]

A plan may respond by pairing near-term spending resources with investments intended for later years. The appropriate amount depends on your spending and income sources. Its structure also needs to account for taxes and your tolerance for portfolio fluctuation. The purpose is to reduce the chance that next month’s spending forces a sale of long-term assets during a decline.

For a broader look at how Dovetail connects portfolio structure with the income it needs to support, see Investment Management.

What deserves a closer look when the next headline arrives?

Ask whether your risk mix has moved outside its intended range. Confirm whether your spending needs or time horizon have changed. Then check whether the plan already provides a scheduled review or a threshold for action.

If the facts changed, the plan may need to adapt. If the portfolio left its target range, rebalancing may belong on the agenda. When neither occurred, continuing the established cadence can also be a deliberate decision. Market highs and lows still matter. Their role is to inform a process grounded in your life, rather than set the process for you.

Related Reading: A Calm Way to Ride Out Market Swings in Retirement. It continues the discussion by focusing on volatility when portfolio withdrawals are already part of the plan.

About the author

Ross Marino, CFP®, CeFT®, is the Founder & CEO of Dovetail Financial and creator of Human-First Financial Guidance®. He helps people nearing or living in retirement connect their lives and wealth so that financial decisions become clearer, more personal, and easier to navigate.

Search another retirement question

Describe the question or enter a few topic words. You do not need to know the exact article title.

 

Notes

  1. “Beginners’ Guide to Asset Allocation, Diversification, and Rebalancing,” SEC Investor.gov.
  2. “Risk and return,” SEC Investor.gov.
  3. “What Is Market Timing?,” FINRA, 2025.
  4. “SPIVA U.S. Year-End 2025,” S&P Dow Jones Indices, March 3, 2026.
  5. “Staying Invested Beats Timing the Market—Here’s the Proof,” Morningstar, 2023.
  6. “Retirement risks and how to manage them,” Vanguard.

Disclosure

This content is provided by Dovetail Financial Group LLC (“Dovetail Financial”) for informational and educational purposes only. It is not intended as, and should not be construed as, individualized investment, tax, legal, or accounting advice; a recommendation to buy or sell any security; or a recommendation to adopt any investment strategy. Because each person’s situation is unique, readers should consult their own financial, tax, and legal professionals before taking action based on this content. Information contained herein is believed to be reliable, but its accuracy or completeness is not guaranteed. Any opinions expressed are current as of the date of publication and are subject to change without notice. All investing involves risk, including the possible loss of principal. Asset allocation and diversification do not guarantee profits or protect against losses in declining markets. Past performance is not a guarantee of future results. Dovetail Financial Group LLC is a registered investment adviser. Registration does not imply a certain level of skill or training. Additional information about Dovetail Financial Group LLC, including Form ADV Part 2A and Form CRS, is available at adviserinfo.sec.gov. © 2026 Dovetail Financial Group LLC. All rights reserved.