By Allen Giese, CLU®, ChFC®, ChSNC®
Just a few months ago (November 2025), I wrote about the importance of staying disciplined when markets are strong. We’d been on a tear for quite some time, and investing within our near-term memory had been all too easy. Optimism had become the default setting for many investors, and I thought it was a good time to suggest the benefits of diversification in what are still unpredictable markets.
Fast-forward to today, and I detect the tone has shifted.
It didn’t take much to shift. As of this writing (March 23, 2026), the S&P 500 is down a mere 3.86% year-to-date. Judging by a few of the calls and emails I’ve gotten, I’d assume it was more. While that drop is not catastrophic by any stretch, it’s enough to make headlines, enough to prompt questions, and enough to make investors a little uncomfortable. And that’s exactly why it’s worth revisiting the same message.
Because the principles that guide successful investing don’t change when markets do.
We Don’t Build Portfolios Around Guesses
It’s always tempting — especially during moments like this — to try to outthink the market. Its near-term future can seem so obvious. So, if we’re heading into a tougher stretch, shouldn’t we move to cash? If volatility is picking up, shouldn’t we “wait it out”? If we think things might get worse, shouldn’t we act now?
These are reasonable questions. But they all rely on the same underlying assumption: that we can consistently predict what markets are going to do next.
If you are a Northstar client reading this, then I’m likely “preaching to the choir” here because it’s an idea that we stress from early on in our relationship. We can’t consistently predict what markets are going to do next. Even when it’s obvious. So we don’t try to.
At Northstar, we don’t build portfolios based on short-term forecasts or market predictions. We don’t adjust our positions or the target weights we allocate to asset classes around predicting what we think is going to happen next. I can’t think of a faster way to experience sub-mediocre returns. No, instead, we build them around something far more reliable: your long-term goals, your time horizon, and your need for both growth and stability over time.
Because while markets are unpredictable in the short run, they have been remarkably consistent over the long run.
Diversification Isn’t About Winning Every Year
One of the things that can feel frustrating in a market pullback is that not everything moves in the same direction at the same time. Some parts of your portfolio may be down more than others. Some may even be up. That’s not a flaw in the design — that’s the design working.
Diversification isn’t meant to maximize returns in every market environment. If that were the goal, we’d simply concentrate everything in whatever is performing best right now. But that approach comes with a hidden cost: It works — until it doesn’t.
Diversification is about balance. It’s about building a portfolio that can participate in growth when markets rise but also provide resilience when they fall. And it’s about ultimately catching the recovery when it comes, the timing of which, in my experience, is typically far more unexpected than any other part of the cycle.
That means there will always be parts of the portfolio that feel like they’re “lagging” in the moment. But over time, that balance is what helps smooth the ride and reduce the risk of major setbacks.
Down Markets Are Not an Anomaly — They’re Part of the Process
It’s easy to forget, after a long stretch of positive returns, that markets don’t move in a straight line. Pullbacks, corrections, and even much more significant downturns are a normal part of investing. They are not signals that something is broken. They are the price we pay for the long-term returns that equities have historically delivered.
In fact, periods like this are not just expected. They are absolutely necessary. Without volatility, there would be no opportunity for growth. That doesn’t make them comfortable. But it does make them understandable.
The Real Risk Isn’t Market Movement — It’s Investor Reaction
When markets decline, the biggest danger isn’t what the market is doing. It’s us. It’s how we respond to it.
History has shown, time and again, that the investors who struggle the most are not the ones who stayed invested through downturns. They’re the ones who tried to avoid the downturns, only to miss the recovery that followed. Market timing requires being right twice: when to get out and when to get back in. Even if someone gets the first decision right, the second is often much harder. And missing just a handful of the market’s best days can have a significant impact on long-term returns.
This is why discipline matters so much: not because it feels good in the moment but because it works over time.
Our Focus Hasn’t Changed
Whether markets are up 20% or down 4% (which could easily be down 20%), our approach remains the same. We start with a plan. We build a diversified portfolio aligned with that plan. And we stay committed to it, adjusting only when your goals, circumstances, or time horizon change, not when the market has a bad quarter or year.
Because your financial future isn’t determined by what happens in any single year. It’s shaped by the accumulation of decisions made over decades.
Moments like this are a good reminder of why we invest the way we do. Not to chase what’s working today. Certainly not to avoid every downturn. And not to predict the unpredictable.
But to build something durable — something designed to carry you through both the good times and the challenging ones.
If you have questions, concerns, or just want to talk through what you’re seeing, we’re here.
That’s what we do.