Jan 22, 2026
Major U.S. stock indexes have seen gains of more than 60% since October 2022, according to a CNBC report (1).
In that time, the S&P 500 has gained about 90%, the Dow about 61% and the Nasdaq about 126%. However much massive gains in the stock market may have increased the value of your portfolio, they are also a reminder of the importance of rebalancing your investments.
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The report notes that some experts think that the market is currently overpriced, which means that a correction may be incoming.
In fact, both Goldman Sachs and Morgan Stanley have warned that a global market correction is likely in the next two years (2).
What does this mean for your investments? Rebalancing is not always a straightforward process. We offer some tips on how to hedge your bet in the face of volatility without playing too risky a game.
Americans have more money in stocks than ever
The market highs come at a time when Americans have more of their money in the stock market than ever. Federal Reserve data from the second quarter of 2025 shows that 45% of U.S. households’ assets were in stock holdings (3).
CNN reports that Americans are investing both directly in the stock market and indirectly through retirement plans such as 401(k)s.
This means a market slump would hit American wealth hard, especially given that inflation remains high and the job market is uncertain. The effect of a slump would, therefore, be a bigger hit to the economy than it might have been in the past, economist Jeffrey Roach told CNN (4).
“The impact of a stock market melt-up or a meltdown — it goes both ways — is going to be much more impactful across the economy than, say, just a decade ago," Roach said.
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Rebalancing your portfolio
Financial advisors suggest that if you have not rebalanced your portfolio recently, you should do so now.
Rebalancing your portfolio is a way to keep your current investments in line with your original investment plan. Your asset allocation is typically decided by assessing how much risk you can tolerate: generally, the longer the money will be invested, the more risk you can tolerate as you have time to weather market ups and downs.
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In the case of retirement savings, as you get closer to retirement age you will typically need to adjust your portfolio so that you have lower risk assets, such as bonds, and fewer higher risk assets, such as stocks.
James Armstrong, president of Henry H. Armstrong Associates, told CNBC (1) that investors should assess what their current risk exposure is, and depending on the purpose of the money, sell down some riskier investments. “[Investors] could have too much in equities and not enough in safe assets,” he said.
Armstrong also said that big market gains can sometimes inspire “FOMO” — fear of missing out — in investors, who neglect to rebalance their portfolios for fear of missing even more big gains. He tells CNBC this is “a dangerous position” and says that, especially for those nearing retirement, it is advisable to have “some money in a safe place.”
“Rebalancing takes the emotion out of it. It puts the client in a position where they have a systematic approach,” Benjamin Offit, a certified financial planner, told CNBC (1).
Some tips for ensuring your portfolio is well-balanced for your age and retirement goals include:
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Reassess your preferred asset mix on an annual basis to ensure your goals are still aligned with your portfolio.
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Consider the tax implications of your investments and seek professional advice if you’re unsure how your portfolio will affect your tax bill.
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Set your thresholds. If you are aiming for 70% stocks and 30% bonds, for example, monitor your investments quarterly to ensure these targets are still balanced.
If you regularly rebalance your portfolio, you will keep your investments aligned with your risk tolerance, and you will also be more informed about exactly where your money is.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC (1), (2); Federal Reserve Bank of St. Louis (3); CNN (4)
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
