Market Returns, Rebalancing, and the Emotional Side of Investing
By: Frank Vance
I hope everyone had a great holiday. As we head into 2026, it feels like a good time to reflect—not just for 2025, but on the last five years. One thing I’ve learned quickly in this business is how easy it is to forget the tough stretches once markets start cooperating again. This note isn’t meant to take away from the strong returns we’ve enjoyed—it’s simply a reminder of how we got here, and why discipline still matters.
I joined Retirement Capital Advisors at the start of 2020. Great timing. Within my first quarter, the S&P 500 fell nearly 30%. Fortunately, the pain didn’t last long. From then through today, the S&P 500 is up nearly 100%—and that came alongside a global pandemic, near economic depression, wars, interest rates moving from 0% to over 5%, political whiplash, and nonstop recession calls. Through all of that, investors who stayed disciplined were rewarded with tremendous long-term returns.
This positive momentum carried into 2025:
· S&P 500: up over 17%
· Tech heavy Nasdaq: up over 20%
· Bonds finally pulling their weight again, with the U.S. Aggregate Bond Index up over 7%
As mentioned earlier, periods like this are exactly when complacency can creep in. Strong markets tend to distort risk, which is why we’ve made several proactive adjustments across portfolios:
· Leaning into short- and intermediate-term bonds to take advantage of attractive yields
· Increasing exposure to higher-quality equity funds with durable earnings
· Trimming positions that had run well ahead of fundamentals
This isn’t a bearish call or a prediction of a major pullback—it’s simply good portfolio management. While markets remain strong, there are areas worth watching. Hiring has cooled, consumer demand has softened at the margins, real estate is frozen by higher rates, and earnings expectations are elevated. None of this signals immediate danger, but it does reinforce the value of balance and rebalancing—especially after strong runs.
Bitcoin offered a good reminder of market psychology this year. For much of 2025, enthusiasm was everywhere. Then, in just over a month, it gave back roughly 25%. That’s not a knock-on Bitcoin or any individual investment—it’s a reminder that what feels exciting on the way up can feel uncomfortable just as quickly on the way down.
The hardest part of investing isn’t markets—it’s emotions. When things are working, it’s easy to feel like you’re missing out. When something pulls back, fear shows up fast. Your financial plan is designed to look through those moments, not react to them.
As always, if you’d like to review your allocation, talk through recent rebalancing, or see how this year’s returns affect your long-term plan, I’m happy to walk through it with you.
Frank, Ed, & Tammy
Retirement Capital Advisors
200 N Union Street
Kennett Square PA 19348
Office- 412-722-3795
Securities and Advisory Services offered through Commonwealth Financial Network®, member FINRA/ SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network
All indices are unmanaged, do not incur fees, charges, or expenses, and investors cannot invest directly into an index. Past performance does not indicate or guarantee future results. All references to markets, equities, bonds, interest rates, or any other security is notional and for illustrative and educational purposes only. This material is for educational purposes only and is intended solely for clients of Retirement Capital Advisors only. It is NOT investment advice, a solicitation or invitation or recommendation to buy or sell any security or investment product. Please contact your own financial advisor for your specific investment situation.