Disclaimer: The following is intended as general information only and should not be taken as personal financial advice. Everyone’s financial situation, goals, and risk tolerance are different. What’s shared here reflects current market observations and trends. For advice specific to your circumstances, please speak with a qualified financial professional.

With political uncertainty on both sides of the border and policy shifts making headlines, markets are adjusting to a fresh wave of unknowns. It’s led to a noticeable uptick in recession chatter, and depending on the headline, it’s easy to assume a downturn is inevitable.

But take a closer look, and the picture is more balanced. While growth is slowing, a recession isn’t a foregone conclusion. In fact, several indicators suggest we could still see modest, positive growth into 2025.

That makes this a good time to step back from the noise and revisit how your portfolio is positioned. Staying prepared for a range of outcomes doesn’t mean retreating from the market — it means making sure your strategy still fits the environment we’re actually in, not just the one making headlines.

To be clear, preparing for volatility doesn’t mean moving everything to cash. Sitting on the sidelines might feel safe, but it often means missing the recovery — and historically, some of the strongest market gains happen just after periods of decline.

As the saying goes, investments are like soap — the more you touch them, the smaller they get. A better approach is to make sure your portfolio is built to weather a range of conditions (slowdowns included!) without reacting to every headline — even in a time when the headlines feel more serious, unpredictable, and unsettling than usual.

Here are a few things I’m keeping in mind as I review client portfolios — and what might be worth considering for yours, too.

Before we get into the market observations, a quick note for those managing their own investments or feeling disconnected from their advisor:

We offer hourly portfolio consulting for DIY investors—and for anyone who hasn’t heard from their advisor in a while and could benefit from a fresh perspective on their investments. There’s no sales pitch, and no effort to convince you to move your investments over. If your system is working and you just want a professional set of eyes to offer reassurance or tactical advice, that’s exactly what we’re here to do.

And if you already invest with us, there’s nothing you need to do. We’ll be in touch if anything in your portfolio needs to change.

If You’ve Been All-In on U.S. Stocks, It Might Be Time to Diversify

Investors who focused on U.S. stocks—especially large-cap tech—have been rewarded over the past decade. The S&P 500 delivered strong results, driven largely by the outsized performance of the “Magnificent Seven”: Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta, and Tesla. Together, these companies now account for nearly a third of the index’s market cap.

The remaining 490+ companies have delivered much more modest returns. While those top names are still growing, expectations suggest a slowdown in their pace—while other sectors like healthcare, financials, and industrials are starting to pick up.

Be cautious of recency bias—the natural tendency to assume that investments that have performed well recently will continue to do so. While U.S. stocks still play an important role in most portfolios, relying too heavily on a narrow group of companies may leave investors exposed if market trends change.

The takeaway: The U.S. will likely remain a cornerstone of many portfolios, but broadening exposure—both across sectors and internationally—may enhance portfolio stability as markets evolve and new growth areas develop. 

Global Markets: Broader Opportunities Are Emerging

We’re seeing a more balanced landscape begin to take shape globally. While the U.S. has led for much of the last decade, other regions are starting to show improved fundamentals and potential for growth.

Europe is beginning to shift out of a long period of economic sluggishness. Structural investment—particularly in infrastructure, energy, and defense—is starting to stimulate parts of the economy that had been lagging. These changes are also trickling down into corporate earnings and investor sentiment across several European countries.

Japan has quietly matched the performance of U.S. markets in recent quarters. After decades of stagnation, Japanese companies are becoming more globally competitive, and the very low valuation of the yen makes the region attractive for international investors by adding the potential for currency gains in addition to equity returns. 

Emerging markets, especially China, are implementing targeted stimulus to support their economies and stabilize growth. While challenges remain – such as an ongoing property sector slowdown –  these efforts are creating opportunities, particularly in countries with growing middle classes and expanding domestic industries.

The takeaway: As growth drivers diversify globally, countries outside of North America may gain a more competitive edge moving forward. A globally diversified portfolio can help investors participate in a wider range of opportunities.

Bonds: A Tool for Managing Risk and Potential Upside

Bonds had a tough year in 2022. In fact, it was one of the worst years for fixed income in four decades. That was largely due to a rare mix of high inflation and weak growth—what economists call stagflation. It’s a difficult environment for all asset classes, and fortunately, it’s also very uncommon. In the past 125 years, stagflation has only shown up in a handful of instances.

Looking ahead, even with recent rate cuts in some regions, interest rates remain well above pre-pandemic levels. That gives central banks room to respond if growth slows by lowering rates further—without the limitations they faced during the ultra-low-rate environment of the 2010s.

That’s important, because when interest rates fall, bond prices tend to rise. Investors holding bond funds could see capital appreciation, in addition to the income those funds are already generating. This makes bonds not just a source of yield, but a potential buffer if markets hit turbulence.

The takeaway: Bonds may once again be an effective volatility hedge—particularly valuable for investors nearing retirement or those looking to reduce risk without stepping out of the market entirely.

The Bigger Picture: Diversification May Regain Its Edge

Over the last decade, portfolios heavily concentrated in U.S. tech performed well. That approach was highly rewarded—but it also came with a significant reliance on a narrow group of companies.

At the same time, diversified portfolios—those built across a broader mix of asset classes, sectors, and geographies—also delivered strong long-term performance. They captured much of the upside from high-performing U.S. stocks, while offering the added benefit of balance, risk management, and resilience across changing market conditions.

Now, the environment is shifting. We’re seeing more even market leadership, renewed strength outside the U.S., and a bond market that’s once again able to do its job. In this kind of setting, diversification may not just reduce risk—it may also enhance return potential.

As economic growth slows and returns become more muted, a thoughtfully diversified portfolio remains one of the most effective ways to manage risk, capture opportunity, and stay invested through uncertainty.

The right mix of assets can help you navigate shifting conditions without overreacting to headlines or short-term volatility.

More than ever, getting advice that’s tailored to your goals, time horizon, and comfort with risk is essential. A well-aligned strategy doesn’t just help you weather what’s ahead—it gives you the confidence to move forward with purpose.

If you’re unsure whether your current approach still fits, use this moment to revisit your plan and make the changes that will set you up for what’s next!