“Let’s Hope for the Best” Isn’t a Strategy

Most people don’t panic when the market wobbles a little. But when the swings get bigger, the headlines get louder, and your account balance looks like it’s experimenting with skydiving, that’s when the questions start: “Should I be doing something different?”

The truth is you don’t have to predict the future to invest wisely. But you do need a plan for what to do when risk rises. That’s what separates a thoughtful investor from someone relying on crossed fingers and good intentions.

The real danger isn’t volatility, it’s big losses. Small dips are part of life. But the deeper the fall, the steeper the climb back up. A 10% loss needs an 11% gain to recover. A 20% drop needs 25%. A 30% decline? Around 43%. And the big one, a 50% hit, requires a 100% return just to break even.

Math may not lie, but it does have a dark sense of humor.

When you’re drawing income from your portfolio, another challenge joins the party, sequence of returns risk. It’s the idea that taking withdrawals while your account is falling can dig a hole so deep that even good future returns can’t fill it back in. A tough market early in retirement has a very different impact than a tough market later.

That’s why having a plan, an actual rules-based plan, to reduce exposure when risks rise can help protect not just your portfolio but help in between your ears!

Why an Exit Strategy Helps

Keeps emotions from holding the steering wheel. You don’t need to guess where the market is going. You just need a way to respond when conditions start breaking down.

Helps avoid the big drawdowns. No plan eliminates risk. But stepping back during weakening conditions can help soften the blow of major declines, the kind that force investors into recovery mode instead of income mode.

Preserves lifestyle flexibility. When you're relying on your portfolio for income, a plan to avoid deep cuts can go a long way toward keeping your monthly spending steady and your stress level quiet.

5-Star Tip:

Don’t wait for the headlines to tell you it’s time to act. They’re usually late to the party and tracking mud across your clean floors. A smarter approach is to have clear guidelines before the storm shows up, the financial equivalent of checking the weather radar instead of opening the window to see if your lawn chair has blown away.

Markets Change. Your Principles Don’t.

The goal isn’t to jump in and out of the market like you’re chasing rabbits. And it’s definitely not about eliminating every downturn, nobody can do that. The goal is to have a thoughtful, disciplined way to adjust when the environment starts shifting.

Staying invested when conditions are strong, reducing risk when conditions weaken, and keeping your long-term plan at the center, that’s how you stay resilient through the ups, the downs, and the occasional market tantrum.

When you know what you’ll do before markets get rough, you worry less, sleep better, and stay focused on the things that actually matter.

👉 Are you looking for a fee-only advisor to work with? Book your free discovery call and let’s start the conversation.

John Piershale, CFP®, AEP®

Fee-Only and Fiduciary Advisor

NAPFA-Registered Financial Advisor

This article is for educational purposes only and is not legal or tax advice. Please consult an attorney or tax advisor regarding your personal situation. John Piershale Wealth Management, LLC is an Investment Adviser registered with the State of IL and in other jurisdictions where exempt from registration. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.