The Quick Take by Stern — Defensive Positioning in Uncertain Times: Asset Classes and Strategies That Perform
- sstern34
- 2 days ago
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The Quick Take by Stern
Defensive Positioning in Uncertain Times: Asset Classes and Strategies That Perform
March 24, 2026
We're living through a collision of three forces right now: geopolitical tension (Iran negotiations, regional instability), technical weakness in equity markets (the "Magnificent 7" and broader indices struggling to find footing), and policy uncertainty around trade, rates, and fiscal direction. That's not a reason to panic—it's a reason to be intentional about how your portfolio is positioned.
I'm seeing clients ask the same question in different ways: "Should I be defensive?" The answer isn't black-and-white. Defensive positioning doesn't mean hiding in cash or pulling back from growth entirely. It means understanding which asset classes and strategies tend to hold up when sentiment shifts, and making sure your overall allocation reflects *your* risk tolerance and timeline—not the market's mood swings.
The Details
History shows us that certain asset classes perform differently under stress. Over the past 20+ years, when equity markets have experienced 10%+ drawdowns:
High-quality bonds (investment-grade corporates, U.S. Treasuries) have typically provided positive returns while stocks fell
Dividend-focused strategies focusing on stable, established companies have outperformed the broader market during downturns
Quality factors—companies with strong balance sheets, consistent cash flow, and lower debt—have weathered volatility better than speculative growth names
Alternative assets (managed futures, absolute return strategies) have offered uncorrelated returns that cushion portfolio swings
Right now, the technical picture suggests caution. Market breadth has been narrow, with concentration in a handful of mega-cap names. That's a setup where the "crowd" can reverse quickly. Meanwhile, fixed income has become genuinely attractive again—yields on 10-year Treasuries and investment-grade bonds offer real value compared to where they were two years ago.
This doesn't mean equities are broken. Growth is still essential for long-term wealth building. But the risk-reward math has shifted. A 60/40 portfolio today looks different than it did in 2021, and different still than in 2000.
What This Means For You
For you, this means asking yourself: *If the market dropped 15-20% tomorrow, would I sleep at night? Would I need those funds in the next 5-7 years?*
If the answer is "no"—you can weather volatility and you have time—your core growth allocation can stay intact. If the answer is "yes"—or if recent headlines keep you up—this is the moment to rebalance toward higher-quality fixed income, dividend strategies, and perhaps a small allocation to alternatives. This isn't about chasing returns; it's about owning assets that work when conditions change.
The sweet spot for most of my clients in this environment: a mix that includes meaningful fixed income (not just 40%), quality-focused equity exposure rather than high-beta growth, and perhaps 5-10% in non-correlated strategies if you have the capacity.
Key Takeaway
**Defensive positioning is about resilience, not retreat.** Review your allocation now—not out of fear, but out of prudence. If your portfolio would cause you stress in a significant downturn, the time to adjust is when things are uncertain, not when they're in crisis. I'm here to help you find that balance. Let's schedule a conversation.
As always, if you want to chat — give me a call at 443-812-5459 or email me at sstern@abel-financial.com.
Warmly,
Steve Stern, CFP®
Abel Financial
Abel Financial is a registered investment adviser. Information presented is for educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. ADV Part 2A is available upon request.
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