23 Sep 2025 The Best Ahead, The Worst Nearby

I once heard a wise investor say we should invest like the best is yet to come, but the worst could be right around the corner. I’ve always appreciated that line because it captures the central tension we face as investors. At its core, investing in the stock market is an act of optimism: a belief that people will continue to innovate, businesses will grow, and economies will expand over time. We invest hoping to participate in the returns that process creates.

But the price we pay for those extra returns is risk. Stock market downturns are not a bug in the system; they are a feature. They remind us that risk and reward are inseparable companions. Just when we begin to feel comfortable with our growing portfolios, we are reminded that progress doesn’t move in a straight line.

With markets at or near record levels, it’s worth pausing to ask: how should we invest when the best may lie ahead, yet the worst could be just around the corner? As I wrote about in a recent Friday Brief, the key is not prediction but preparation, positioning ourselves for an uncertain future without trying to forecast its exact timing or direction.

Here are a few practical steps we can take to ensure our portfolios remain well-positioned whether the market continues climbing or takes pause.

Revisit risk. It’s important to consider two different measures of risk: the amount you can comfortably live with, and the amount you need to take in order to reach your financial goals. The right portfolio lies at the intersection of those two. A well-designed financial plan helps clarify how much return, and therefore how much risk, is truly necessary. The other side of the equation is more personal. A good starting point is to reflect on how you felt the last time the stock market misbehaved. If the last market downturn kept you up at night, it may be worth exploring whether your plan still works with a bit less risk.

Rebalance your portfolio. With the stock market near an all-time high, there’s a good chance your portfolio has drifted from its original mix. As stocks rise faster than bonds, they naturally begin to take up a larger share of your portfolio than you may have intended. This can leave you exposed to more risk than you’re comfortable with—or more than your plan calls for. Rebalancing helps bring things back in line by trimming what has grown and adding to what hasn’t. It’s an important discipline that helps keep your portfolio on track with your long-term goals and with the right mix of risk and reward.

Keep cash ready. Money you’ll need in the next year or two doesn’t belong in the market. Make sure you have enough set aside in cash or short-term investments to cover upcoming expenses, withdrawals, or Required Minimum Distributions. Knowing that these funds are safely set aside can make it much easier to stay the course with your long-term portfolio during periods of market volatility.

Give strategically. If you’re thinking about charitable giving, now could be a good time to consider donating appreciated stock instead of cash. When the market has done well, giving shares that have grown in value can have an even greater impact than a cash gift. It can be a tax-smart way to support the causes you care about while potentially reducing your capital gains tax.

I’m not trying to call the top of the market—I don’t know where things will go from here. What I do know is that it’s smart to address these issues before a market correction, rather than after. At Beacon, we focus on what we can control. By revisiting risk, rebalancing portfolios, keeping cash ready, and giving strategically, we help our clients position themselves for the good times ahead while preparing for periods when the market doesn’t go as planned.

Let us know if you’d like to chat.