Navigating Market Volatility with Tactical Adjustments

Monday’s 6% drop in the S&P 500 marked a sharp start to the week, but thanks to proactive trading the prior Thursday, our portfolios were already positioned defensively. This tactical approach allowed us to sidestep much of the 9% market correction, resulting in minimal impact to client accounts.

Rebuilding Equity Exposure After the Drop

With the market meeting our target of a near-10% decline, we made the decision midweek to gradually reintroduce equity exposure. On Wednesday, we increased large-cap U.S. stock allocations across all model portfolios, moving from a range of 30–35% to 45–50%, depending on individual risk profiles. We also selectively added exposure to Chinese equities and maintained our positions in emerging markets.

Our outlook included expectations for a short-term rally back to the 2000 level on the S&P, after which we were prepared to shift back into a more conservative stance.

Taking Gains and Repositioning Defensively

That rally arrived quickly. By Thursday, markets rebounded as expected, and we acted promptly to capture gains from the volatility. We exited all positions in emerging markets, gold miners, and oil, and sold one-third of our U.S. equity exposure.

We are now back in a more defensive allocation, holding roughly half of our typical equity positions. Depending on the risk model, portfolios continue to hold some exposure to China, energy, and fixed income assets.

Remaining Nimble in a Volatile Market

We continue to anticipate ongoing market swings and are prepared to act decisively when opportunities present themselves. Our tactical management strategy remains focused on protecting capital while seeking growth when conditions are favorable.

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