Markets are turbulent and are likely to remain volatile for a period. In the US, the signals from Washington point to a deliberate economic transition — one that will create disruption even if the longer-term objectives are legitimate. The question for investors is not whether volatility will occur but whether their portfolios are positioned to absorb it without forcing poor decisions at the wrong moment.
What the past 15 years delivered
The equity returns of the period from roughly 2010 to 2025 were exceptional by any historical standard. US stocks, in particular, went on a relentless run — with drawdowns shallow and recoveries fast. Any investor who maintained a simple, passive equity allocation through that period was rewarded with compounding returns that made diversification look unnecessary and caution look foolish.
That experience shaped investor behaviour and expectations in ways that are worth examining carefully. When a strategy works for 15 years, it becomes the default. The assumption that dips are temporary and recoveries are inevitable gets baked into risk tolerance assessments and portfolio construction decisions. The result is portfolios calibrated to a regime that may not persist.
The current environment
Seasoned investors whose views we respect are not forecasting a recession. The economic cycle should continue. Services employment continues to grow. A global easing cycle, strong US productivity, and a supportive technical backdrop will likely keep the balance tilted toward positive outcomes in 2025. The glass is half full.
But the conditions that produced the exceptional returns of the past 15 years — falling interest rates, expanding price-to-earnings multiples, disinflation, and free capital flows — are not fully present in the current environment. Returns from here are more likely to reflect underlying earnings growth and dividends than multiple expansion. That is a different and lower-return environment, even if it is not a recessionary one.
"One of the most timeless insights of investing is that you don't need to bet on knowing how it will all turn out. Investing wisely is about preparing for a range of outcomes." — Bob Prince, Co-Chief Investment Officer, Bridgewater Associates
Preparing for a range of outcomes
The Bridgewater framing is useful precisely because it does not require a forecast. You do not need to know whether inflation will reaccelerate, whether geopolitical tensions will escalate, or whether the US technology premium will persist. You need a portfolio that can absorb a range of plausible scenarios without catastrophic damage to any of them.
That means genuine diversification — not the appearance of diversification achieved by holding multiple ETFs that are all correlated to the same US equity cycle. It means real assets that perform when inflation rises. It means fixed income that is positioned for the current rate environment rather than the last one. And for many clients, it now means considering access to private market assets — infrastructure, private credit, private equity — that were historically available only to institutional investors but are increasingly accessible to individuals through managed funds and platforms.
What we are doing for clients
The firm is working on adding meaningfully more diversity to client portfolios. With increasing access to products historically available only to institutional investors — private infrastructure, private equity, and private credit — the range of genuine diversifiers available to individual investors has expanded substantially.
The goal is not to chase returns from asset classes that have recently performed well. It is to construct portfolios that are resilient across a wider range of economic and market scenarios than a standard equity-and-bonds allocation can provide.