How rare is rare? The COVID pandemic was a once-in-a-century event. Likewise, back-to-back gains of over 20% for the S&P 500 in 2023 and 2024 were rare, happening only three times since 1950. These market anomalies occurred in the mid-1950s and again from 1995-1999.

As a semi-retired physician, here's how I handled that huge bull run and what was to come in the early part of 2025.

Backdrop: A Historic Bull Run

Astute investors rebalance their allocations at least annually (though you’d probably be fine doing it every couple of years). Many investors enjoyed a run-up of over 50% in equities from August 2022-February 2025. Shame on me for not taking steps to protect this massive gain by dialing back equities when my allocation was skewed to 70% stocks from these year-on-year gains. This is especially true given my age (61 in April 2025) and the fact that I’ve been semi-retired for three years.

I did think about it. I had a specific plan in mind. I allowed myself to be talked out of it, and it was not my best moment.

An S&P 500 calculator for that timeframe indicated an approximate 50% return with dividends reinvested. An extra 5% (total 55%) after all fees was obtained by the AUM firm that I employed to manage my equities when I dropped to half-time in August 2022. For the second time in my investing career, I had handed money over to experts and paid them for their expertise. This time, it was over half of our money, and it was all equities. I managed the other boring, less risky half: bonds, CDs, short-term Treasuries, private debt, and a money market cash reserve.

This was not the usual WCI plan, and it differed greatly from self-managing a basket of low-cost index funds or ETFs. I've never had the guts to just buy three or four index funds and call it good, and I liked the idea that someone else was “on watch,” so I could enjoy my freedom and travel with only a rare thought to my equity portfolio. The AUM fee was about 1%, and the company beat the S&P 500 during this time frame, after all fees. I slept better for several years knowing that my equities were being actively managed by this firm with decades of experience and hundreds of analysts. My sleep and peace of mind seemed worth the fees on the equity portion of my investments during this time of outperformance—until, that is, I disagreed with them about my allocation.

In February 2025, I was riding the market high, feeling great, and looking to take some money off the table. I talked to the AUM advisor who I had known for over two years, expecting some pushback since they only get paid if my assets were still under management. I proposed taking about one-fourth of the equity money out of the market and putting it in short-term Treasuries (SGOV at 4.7% back then) to dial back my equity allocation to my “sleep number” (my ability to sleep and enjoy life without thinking much about stocks) from a lofty 69% after the massive two-year equity boom.

You can guess the rest.

The advisor talked me out of it with phrases like “building a legacy,” “too conservative,” “you are still working and making enough money to pay all of your bills,” and similar verbiage across two phone calls with market projections of the next decade, complete with charts and graphs. I knew a pitch to keep my money with the advisor was coming, but greed overruled my rational brain. I had just put some of my cash hoard into our small mortgage and had plans to do it again in six months as I thought the interest rate arbitrage was becoming less compelling.

More information here:

All the Money Mistakes I’ve Made (and How It Cost Me an Even Earlier Retirement)

The Perspectives of an Older Investor vs. a Younger Investor

The Tariff Shock: Black Swans Appear

Another very rare event occurred soon after. It became clear to the world that the new presidential administration was not kidding about placing tariffs on many imported items. Not only that, but the tariffs were larger than many had expected. The market bucked and dropped, and it dropped even more until the administration acquiesced and reversed course when the bond market got “yippie” in April 2025. The resetting of the global economic order of the last 80 years was not met with open arms.

Financial articles began to appear talking about the impact on the value of the dollar and “self-inflicted damage to the US brand.” That was not a common theme I had seen in the past. This seemed new to me, but other administrations had made sweeping changes that had economic fallout that was generally temporary. And considering US stocks rose about 17% by the end of 2025, the economic fallout from the tariffs also proved temporary.

But in April, I was caught flat-footed, like many, including my AUM firm. I have always been told to generally ignore politics and policy effects on the market. Given that a company of stock-picking, market-beating experts had no real plan for these events, I felt slightly less foolish. But friends of mine said, “You didn’t take money out of the market knowing they were going to enact tariffs?” Of course, the usual answer to a correction is “hold” and to “cost average in.” In fact, a long list of investing experts preach “hold,” no matter the market conditions. But what if the conditions have no precedent in your memory?

The back-to-back gains of greater than 20% have happened three times in 75 years. A new administration bent on tariffs on a backdrop of barely controlled inflation seemed even more risky.

To appear to use trial and error for monetary policy seemed rather “Black Swanny” for me. Rare or “unprecedented” events or not, my overall portfolio was stomped by a near-NASDAQ bear and a deep correction in the S&P 500. With 70% equities and with the AUM company having not made substantial risk adjustments, it was an overall smackdown of 15% on those AUM-managed equities. In dollars, it was the size of the hit my entire portfolio took in the COVID flash bear of early 2020. I had a COVID flashback reading about supply chain issues to come.

Lessons Learned

  • If you don’t rebalance your equity exposure after a rare run-up, that’s just lazy or foolish or both (though some would disagree since nobody knows the future).
  • If you offload risk to an expert AUM company, you could get lucky . . . or not. That company also may not want to take money off the table and reduce its own fees.
  • Politics and policy play a role in market movements, and your overall allocation is your only tool if you don’t believe in making adjustments based on new policy.
  • I’m too old to have 70% equities, given that a correction caused some insomnia. My risk tolerance at this point is not as high as I would’ve thought.
  • Peace of mind has a price: lower long-term returns and less of a legacy. I’m not sure we need to leave a few million dollars on the table anyway.
  • Keep Calm and Persevere regardless still seems to be correct in hindsight.
  • Outsourcing risk to experts doesn’t guarantee safety.
  • Political risks do have short-term impacts on portfolios—even if we are told to ignore them.
  • Real risk tolerance shows up in real-world volatility.
  • For me, peace of mind and decent sleep are more important than maximizing returns.

More information here:

Don’t Push Your Luck (Physically or Financially)

The Happiness Index: Mine Required My Own Version of Retirement

What’s Next for My Portfolio

What’s next for me? I’d like to take some of the money that I wanted out of the market off the table. The questions are when and how much it will cost. As of the first draft of this post in April 2025, the drop was still about 9% on that basket of equities. By the end of 2025, the stock market was once again breaking all-time high records. At the time, I found myself hoping for a bounce despite all the uncertainty. It felt like there was little on the horizon that was short-term bullish for equities. For perspective, selling that basket with this loss would erase three years of SEP-IRA contributions. I did not pull the trigger on that shot to the foot. I waited until an old 401(k) plan got back to scratch and reallocated it to short-end bonds.

Since no one has a crystal ball, you allocate for your risk tolerance, rebalance yearly, and stick to your plan. Nothing is new under the sun. Politics don’t matter much in the long term. But to me, these recent events felt unique. Policy impacts markets. I was fairly certain more economic pain was coming as the tariff effects could not be fully known, and the Fed seemed to be holding steady due to feeling like a deer in the headlights with further inflation fears. I also thought there would be no Fed rescue for the market as there was for the COVID bear when it moved rates to ZERO and bailed out the bond market. This time . . . crickets . . . and Yips. Until, of course, everything course-corrected.

The AUM company with two years of market-beating returns talked me out of reducing my equity allocation to what was comfortable for me at a time of high unpredictability. It was caught unaware by the tariffs, and my confidence in the company dropped accordingly. It didn’t help that my advisor was promoted and replaced by a much younger version. I prefer advisors closer to my own age who have been through several bears . . . and a pandemic. I ended up giving the company more time, and the market ended up coming back. Most people did little during the tariff correction. The Wall Street Journal reported at the end of April 2025 that “Vanguard estimates that more than 97% of investors in its 401(k) retirement plans didn’t make trades through mid-April, and a fifth of investors increased their saving rate.”

I have previously talked about having a multi-year emergency fund that would allow me to ride out a bear market for several years. Of course, all of us “old folks” remember the seven-year bear recovery from the 2000s “dot.com” crash. I also seem to need a more conservative allocation to sleep well and keep my Nexium dose stable. In my defense, once you get to a large portfolio, a correction feels like two years of retirement expenses out the window for a while. One of my anesthesiologist friends told me his portfolio was down $1.4 million after the tariff announcement. He had a plan to buy more equities. Maybe that’s why his portfolio is triple the value of mine.

I have not been a fan of bonds since 2020. I’m likely to settle out at 60% equities with some bonds. I’ll still keep a couple of years of emergency cash. Why so much cash? Well, I like to have a big bucket of cash to minimize the Sequence of Returns Risk, and I’m getting older (though I am still working part-time). My bond exposure will be on the short end as the government seems to have no real interest in reducing the deficit based on budget proposals.

A portfolio allocated with 60% equities, 20% bonds, and 20% cash has historically yielded an average annual return of approximately 7% before inflation. It lags the typical 60/40 by about 0.6% percent per year. With historical inflation around 3% annually, the inflation-adjusted return of this portfolio would be approximately 4%.

In a plan with 4% drawdown per year and a cash bucket to weather a several-year-long bear market, with assumed 3% inflation, it seems my portfolio should not shrink much and leave plenty of legacy.

You know this maxim: “If you’ve won the game, stop playing.” The problem is that not playing is difficult with persistent 3% inflation.

How did you fare in 2025? Did you take money off the table once the market fell in April, or did you stay the course? What, if anything, should I have done differently?