The short version is that buy-and-hold and dynamic asset allocation are different approaches, and periods like 2008, 2020, and 2022 help illustrate where those differences matter. I wrote about this in real time during the April 2025 market selloff. Read it here if you want additional context on how I was thinking about risk at the time.

Buy-and-hold can be a reasonable long-term strategy for some investors, but periods like 2008, 2020, and 2022 show that static allocations can still go through sharp drawdowns. In 2008, the S&P 500 dropped roughly 57% from peak to trough1. In early 2020, markets fell more than 30% in a matter of weeks2. In 2022, both stocks and bonds declined together, which challenged the way many investors think about diversification in a traditional balanced portfolio3.

Those types of drawdowns can be especially difficult for investors who are relying on their portfolio for near-term goals, retirement income, or business-related liquidity needs.

My approach is centered on responding to what the market is actually doing rather than assuming it will recover on a specific schedule. As a Chartered Market Technician®, I use price trends, momentum, and other technical indicators as part of the process. When the weight of the evidence changes, portfolio positioning may change as well. The goal is not to predict every move or eliminate downside. It is to apply a disciplined framework that can adapt as market conditions evolve.

About Author

Todd Stankiewicz | President & Chief Investment Officer, SYKON Capital

Todd Stankiewicz is the Chief Investment Officer of SYKON Capital, a fee-based registered investment advisor with offices in Westchester County, NY and Jupiter, FL. He is a recurring guest on Fox Business and the Schwab Network, where he discusses markets, portfolio strategy, and investor behavior. Learn more at www.sykoncapital.com

Sources:

1 Federal Reserve History, “The Great Recession,” noting the S&P 500 fell 57% from its October 2007 peak to its trough in March 2009.

2 Market recap data for the S&P 500 decline from February 19 to March 23, 2020. 3 Callan analysis of simultaneous stock and bond declines in 2022.

CFP® is a registered trademark of Certified Financial Planner Board of Standards, Inc. CMT® and Chartered Market Technician® are registered trademarks of CMT Association.

Advisory Services offered through SYKON Capital LLC, a Registered Investment Adviser with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor. The information contained in this presentation has been compiled from third party sources and is believed to be reliable as of the date of this report. Sources are provided for informational purposes only. The author or firm may have a financial interest in the topics discussed. Past performance is not indicative of future returns and diversification neither assures a profit nor guarantees against loss in a declining market. Investments involve risk and are not guaranteed.

If you own a business, are approaching retirement, or are already taking income from your portfolio, these are some of the situations where dynamic asset allocation often becomes a more meaningful conversation.

Investors hear the phrase “dynamic asset allocation” and immediately think trading or market timing. In reality, the conversation is often less about prediction and more about flexibility, liquidity, and managing portfolio risk around real-life circumstances.

One group that may find this approach relevant is business owners. Their company is often their largest asset, and it is usually not something they can access quickly. The investment portfolio sitting alongside that business may play an important role in providing liquidity. If markets decline materially and cash is needed for operations, family needs, or unexpected expenses, that timing matters.

I also work with pre-retirees in that window leading up to retirement, when a large drawdown can affect future spending plans and retirement timing. For clients already in retirement who are taking regular distributions, market declines can be even more difficult because withdrawals may increase pressure on the portfolio.

That is sequence-of-returns risk [1], and it is an important issue for retirees and near-retirees to understand.

The issue is not limited to a stock market decline. As 2022 showed, there can be periods when bonds do not provide the diversification investors expect [2]. Dynamic allocation is one way to evaluate drawdowns and changing correlations within a broader portfolio process. The common thread across these client situations is a preference for flexibility, liquidity, and ongoing risk management.

The common thread across these situations is not trying to predict every market move. It is recognizing that different investors experience risk differently depending on how and when they may need to access capital.

1 Sequence-of-returns risk reference discussing how early negative returns combined with withdrawals can impair portfolio sustainability.

2 Callan analysis of 2022 stock and bond declines and diversification limits.

CFP® is a registered trademark of Certified Financial Planner Board of Standards, Inc. CMT® and Chartered Market Technician® are registered trademarks of CMT Association.

Advisory Services offered through SYKON Capital LLC, a Registered Investment Adviser with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor. The information contained in this presentation has been compiled from third party sources and is believed to be reliable as of the date of this report. Sources are provided for informational purposes only. The author or firm may have a financial interest in the topics discussed. Past performance is not indicative of future returns and diversification neither assures a profit nor guarantees against loss in a declining market. Investments involve risk and are not guaranteed.