NEW YORK — The stock market faces heightened volatility in September and October, months that have historically challenged equity performance and prompted investors to review portfolio defenses.
Over the last 50 years, the S&P 500 posted double-digit annual losses in five separate years between 1975 and 2025. Rolling five-year periods produced double-digit losses only three times: in the periods ending 1974, 2004 and 2008.
For long-term investors, the S&P 500 has never lost ground in any rolling 15-calendar-year period over the last 50 years. Short-term declines are real, but a longer holding period has historically rewarded patience.
The first line of defense is broad diversification. Robert Varghese, head of investments, said every portfolio should carry exposure to stocks, bonds and alternative investments. Spreading capital across asset classes, geographies and industries reduces the impact of any single market shock. A portfolio more diversified than the S&P 500 typically absorbs daily headline risk better than one concentrated in equities alone.
The second protection method is a cash contingency equal to three to six months of living expenses. That reserve prevents investors from selling holdings at a loss to cover an unexpected expense or job loss, and keeps retirement accounts intact when unbudgeted costs arise.
The third strategy is asset allocation matched to life stage. Investors in their 20s, 30s or 40s have time to recover from market swings and can reasonably hold 80 percent to 100 percent in stocks. As retirement approaches, shifting toward bonds dampens short-term volatility and reduces sequence-of-returns risk. Retirees should pair deliberate asset allocation with careful spending to preserve capital.
Market volatility flows from economic uncertainty, inflation, geopolitical conflict and natural disasters — forces no investor controls. What investors do control is portfolio structure. Planning ahead, maintaining patience and making measured adjustments keep long-term financial goals intact.
