Key Takeaways

  • Markets have recovered sharply from two major geopolitical shocks in 2026, but many of the underlying risks remain. Portfolios are now navigating those conditions from a higher starting point.
  • The traditional relationship between stocks and bonds has changed. In a higher-rate, higher-inflation environment, bonds have at times declined alongside stocks, meaning they may not cushion your portfolio the way they once did.
  • Our investment committee recently made deliberate adjustments to one of our proprietary portfolios in response to these conditions, including trimming equity exposure, concentrating in highest-conviction areas, and introducing a new diversifier funded from the bond side.
  • Strong markets may offer more flexibility to review and adjust your plan than periods of market stress. A qualified financial professional can help you think through whether your current positioning still works best for your goals and timeline.

Watch the Full Market Update

In this video, Dave Alison, CFP®, EA, BPC, Chairman of our Investment Committee, walks through the specific portfolio adjustments we made in May 2026, the data behind each decision, and what current market conditions may mean for your retirement timeline. Prefer to read? The full breakdown is below.

 

If you are approaching retirement or already in it, the decisions you make in strong markets may matter just as much as the ones you make when markets are falling. Right now, markets are near all-time highs, and our investment committee has been paying close attention to what that may mean for how portfolios are positioned.

This post shares what we are seeing, what we did inside our own proprietary portfolios, and some frameworks worth considering as you think about your retirement plan today. Whether you are a current Prosperity client or simply looking for perspective on the market environment, this piece is worth your time.

Why We Are Paying Close Attention Right Now

When a portfolio reaches a new high, it can be tempting to treat that number as a destination. For our investment committee at Prosperity Capital Advisors, it is a signal to look more carefully.

A strong market run can shift the balance of a portfolio in ways that may no longer reflect your actual needs.

Assets meant to fund near-term income may now carry more risk than originally intended. Long-term growth positions may have expanded into a larger share of the portfolio than the initial plan called for. The overall picture may look favorable on paper while gradually drifting from the strategy designed around your specific goals and timelines.

Periods like this can create flexibility to make thoughtful adjustments, which is one reason our committee reviews positioning closely after strong market runs.

What Staying Invested Through This Year’s Volatility May Have Delivered

This year gave many people reason to second-guess their portfolios. Geopolitical shocks rattled markets, headlines turned pessimistic, and the urge to move to the sidelines and wait for things to settle was difficult to ignore.

Markets recovered faster than many people expected. When the U.S./Iran conflict sent markets lower earlier this year, the S&P 500 recovered its prior high in just 11 days. A comparable shock the prior year took 55 days to recover. In both cases, many of those who moved to cash while waiting for a clearer signal found the recovery was already underway before they felt comfortable getting back in.¹

Many of the risks that contributed to those earlier pullbacks have not fully resolved. Oil prices moved from approximately $65 to $95 a barrel. The 10-year Treasury yield moved from 3.9% to 4.5%. Federal Reserve policy expectations shifted from anticipating multiple rate cuts to pricing in a possible rate hike. Markets have moved higher despite those conditions, which means portfolios are now navigating similar risks from a higher starting point.¹

Why Portfolio Protection Has Changed

For many of the past 40 years, bonds played a dependable role in a diversified portfolio. When stocks fell, bonds tended to rise, cushioning the impact and providing a degree of stability.

That relationship has become less reliable in recent years. In a higher-rate, higher-inflation, higher-debt environment, stocks and bonds have at times declined together, potentially reducing the protection that bonds were traditionally expected to provide. Our investment committee’s analysis shows this pattern becoming more pronounced starting around 2022.²

Data from that period is worth understanding. During months in 2022 when inflation surprised to the upside, stocks fell approximately 6.82% and bonds fell approximately 2.56% during the same period. A liquid alternatives strategy, by contrast, returned approximately 1.47% during those same months.³

This shift may have implications for portfolios that were constructed around assumptions about how bonds and stocks interact. It is one of the factors our investment committee considered when making recent portfolio adjustments.

How We Responded, and Some Questions Worth Considering

Understanding what a professional investment committee monitors and adjusts may help inform the questions worth bringing to your own advisor.

After a strong market run, our investment committee made deliberate adjustments to one of our proprietary pre-tax model portfolios, managed in partnership with BlackRock. In short: keep our best ideas, trim the broad exposure, and add better shock absorbers.

The committee trimmed broad equity exposure while maintaining and concentrating positions in high-conviction areas including AI-driven growth and U.S.-focused companies. The committee also introduced a new liquid alternatives allocation designed to provide additional diversification when inflation affects both stocks and bonds. That new allocation was funded from the bond side of the portfolio.⁴

Each decision reflected a deliberate view about where risk lives in a portfolio and how to manage it more intentionally given current conditions. The reasoning behind these choices may be useful context for your next plan review with your advisor.

Note: These changes apply specifically to pre-tax, tax-deferred accounts such as IRAs. Taxable accounts are managed with the added priority of tax efficiency, so the implementation may look different there. If you have questions about your specific accounts, your advisor can walk you through it.

A Framework for Thinking About Your Money in Retirement

One practical way to think about retirement planning is to organize your assets around time: specifically, when you expect to need your money. This kind of time-horizon approach can help clarify which assets are more affected by short-term market movements and which ones have more room to ride out volatility.

At Prosperity Capital Advisors, we structure client portfolios around The Bucket Plan®, which organizes assets according to three distinct phases: Now, Soon, and Later.

How Assets are Organized through The Bucket Plan®

The Now bucket is designed to cover near-term income needs, typically the first one to two years of retirement expenses. Because this money needs to be easily accessible, it is generally kept in lower-risk, more liquid positions.

The Soon bucket is designed to cover the intermediate term, generally the next three to ten years. These assets may be invested with some growth potential but with more stability than longer-term holdings, serving as a bridge between near-term needs and long-term growth.

The Later bucket is designed to house assets marked for long-term growth, those which may not be needed for a decade or more. Because this portion has a longer time horizon, it can generally remain invested through periods of market volatility without disrupting the income the Now and Soon buckets are designed to fund.

Whether or not you use this specific framework, the underlying principle applies broadly: knowing which of your assets are meant to fund near-term needs and which are meant to grow over the long term may help you make more informed decisions when market conditions change.

In an environment where bonds may provide less reliable protection than in the past, having clarity around which assets serve what purpose can be a useful starting point for planning conversations.

What Strong Markets May Mean for How Your Assets Are Positioned

For those already using a time-horizon framework like The Bucket Plan®, a strong market run may affect the balance across your buckets in ways worth reviewing with your advisor.

When markets perform well, assets in the long-term growth portion of a portfolio tend to increase. That can be a positive outcome, but it may also mean that the overall balance has shifted from where it was when a plan was last reviewed. The portion designed for near-term income may now carry more risk than originally intended. The long-term growth portion may now represent a larger share of the overall portfolio than the plan called for. And the near-term income portion may be running leaner than intended if it has not been replenished recently.

For those who do not yet use a structured time-horizon framework, a strong market environment may be a reasonable time to review how your assets are allocated across short, intermediate, and long-term needs, and whether that allocation still reflects your goals and timeline.

Strong markets may offer more flexibility to address these kinds of imbalances than periods of market stress, when adjustments may need to be made at less favorable prices. Speaking with a financial professional, like our team at Prosperity Capital Advisors, while conditions are favorable may help you evaluate more options than waiting until something feels wrong.

If you are already a Prosperity Capital Advisors client, our investment committee is actively monitoring and adjusting your portfolios in response to changing market conditions. Reviewing how your plan is positioned alongside those adjustments may be a worthwhile conversation to have with your advisor.

Start the Proactive Portfolio Management Conversation

If you are exploring what a more proactive approach to financial planning and investment management may look like, the current market environment offers a useful illustration of how a dedicated investment committee can respond to shifting conditions. At Prosperity Capital Advisors, our committee monitors our proprietary portfolios continuously, making research-driven adjustments designed to keep clients positioned for what may be ahead.

Some questions that may be worth exploring before your next portfolio review:

  • Is your near-term income funded at a level that feels appropriate for your timeline?
  • Does the risk profile of your intermediate assets still reflect your income needs over the next several years?
  • Has your long-term growth portion changed in a way that may call for a review?

Need help thinking through these questions in the context of your specific situation? Connect with a Prosperity Capital Advisors financial professional today.

 

 

 

 

Disclosure: Prosperity Capital Advisors delivers holistic wealth management through our Five Pillars framework: Financial Planning, Asset Management, Tax Management, Protection Planning, and Legacy Planning. This content is for educational purposes only and does not constitute individualized tax, legal, or insurance advice. See our full list of advisors by clicking here.

 

Sources

¹ Bloomberg, Strategas, as of 4/17/2026. S&P 500 Index. Liberation Day drawdown indexed from the 2/19/2025 relative peak. Iran War drawdown indexed from the 1/27/2026 relative peak. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Oil price represented by Generic 1st CL Future Commodity Index. 10-year yield represented by US Generic Government 10 Year Bond Index. Federal Reserve federal funds rate expectations via Bloomberg. As of 5/26/2026.

² Bloomberg, KKR, as of 5/26/2026. Bloomberg US Treasury Total Return Index, S&P 500 Total Return Index. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

³ Bloomberg, Citi Inflation Surprise Index, 1/31/2021 to 12/31/2022. Liquid alternatives represented by the JP Morgan Alpha Select Alternative Benchmark Index. Stocks represented by the S&P 500 Total Return Index. Bonds represented by the Bloomberg US Universal Total Return Index Value Unhedged. Inflation surprises measured during months when the Citi Inflation Surprise Index reversed momentum higher (February, June, September 2022). Charts show average one-month returns during those three months. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

⁴ BlackRock, as of 5/28/2026. Views are subject to change. This information is provided for illustrative and educational purposes only and does not constitute personalized investment advice or a recommendation. Holdings, performance, and other characteristics of any portfolios or accounts derived from this information may vary materially.