As we approach 2026, investors are navigating a familiar mix of strong market performance, shifting interest rates, and ongoing economic uncertainty. Questions about diversification, rebalancing, and risk management are becoming more common, especially for those focused on long-term financial security.

To help bring clarity to these topics, Allegheny Financial Group’s Eric Matsko, CFP®, recently sat down with our Director of Research, Joe Clark, CFA®. In the conversation below, they address several timely investment questions for 2026 and explain how thoughtful planning, rather than prediction, can help investors stay aligned with their long-term goals.

Why Is Gold Rising When Markets Are at All-Time Highs?

Short Answer: Gold and stocks can rise at the same time because gold is largely uncorrelated with equities. Gold often reflects uncertainty, currency dynamics, and geopolitical risk, while stocks may rise on growth expectations, making diversification especially important during uncertain periods.

Q: Gold has recently reached an all-time high. Why would gold do well at the same time the market is at all-time highs?

A: Gold has been on an impressive run over the past two years, particularly this year. While gold is often described as uncorrelated with stocks, that simply means it tends to move independently; it does not require equity markets to decline to perform well.

Several factors have contributed to gold’s strength, including tariffs and trade tensions, a weakening U.S. dollar, government shutdown concerns, and increased gold purchases by emerging-market central banks following Russia’s invasion of Ukraine. Elevated equity markets can also coexist with rising gold prices when broader uncertainty remains high.

Historically, gold tends to perform best during periods of heightened uncertainty and fear. If gold is signaling anything today, it is the importance of remaining diversified. Uncertainty can act as either a positive or negative catalyst for stocks, but in either case, maintaining a globally diversified portfolio remains a prudent approach when environments like this persist.

How Do Falling Interest Rates Affect Bond Investments?

Short answer: Falling interest rates generally benefit bond portfolios because bond prices and interest rates move in opposite directions. As rates decline, existing bonds with higher yields become more valuable, which can add to total return.

Q: We saw what rising rates did to a portfolio of stocks and bonds. What impact will falling rates have?

A: When interest rates increased sharply in 2022, bonds experienced one of their worst years on record. Rates moved from historic lows to increases of more than 5% in roughly a year, which created significant pressure on both stock and bond portfolios.

We are now beginning to experience the opposite environment as the Federal Reserve has started to slowly lower interest rates. Bond prices and interest rates move in opposite directions, so when rates were rising in 2022, bond prices were falling.

While the period was painful, it has also positioned bond portfolios more favorably today. Bonds are now paying higher yields than they were just a few years ago. If interest rates continue to decline, portfolios may benefit further as bond prices increase, adding value alongside income. 

When Should Investors Rebalance Their Portfolios?

Should I rebalance my portfolio in 2026?

Short answer: Rebalancing should be driven by risk management, not by time. Rather than trimming an asset after a set period of outperformance, investors are generally better served by rebalancing when portfolio allocations move outside predefined risk or allocation ranges.

Q: How often should I rebalance my portfolio, and for how long should I monitor outperformance before trimming an asset—1, 3, or more years?

A: I don’t believe it makes sense to rebalance portfolios based on time alone. The purpose of rebalancing is to manage risk, and placing a specific timeframe on an asset’s outperformance does not accomplish that goal.

Instead, rebalancing is most effective when it is guided by predefined allocation ranges or guardrails. When an asset grows beyond its intended role in a portfolio, it can increase overall risk exposure. Monitoring portfolios relative to these guardrails helps investors to manage risk intentionally rather than reacting to short-term performance or market headlines.

Why Rebalancing Is About Risk Management—Not Market Timing

Instead, placing guardrails around each investment is a better rebalancing method. Let’s say 15% of a portfolio is allocated to U.S. large growth stocks. You could place 3% guardrails on this position, and when it hits 18% you sell 3% back to its target weight and reinvest the profits to assets that are underweight their target weight.

Taking profits using this philosophy removes emotions from the equation and helps the portfolio maintain an appropriate risk profile. Portfolio allocations should be disciplined and control risk so clients’ spending needs are met, no matter what markets are doing. Since we never know when markets will rotate, time matters less to me; I am more focused on helping to ensure portfolio risk is appropriate for each client.

Should Investors Be Preparing for a Recession in 2026?

Short answer: No one can reliably predict when the next recession will occur. Rather than trying to time economic downturns, preparing your investment portfolio for a recession through diversification and disciplined rebalancing is generally a more effective approach.

When will we experience the next U.S. recession?

If I knew that answer, I would not be sitting here. Since WWII, we have had a recession every 5-7 years, on average. The further we move away from 1945, the longer we go without a recession. Since the Global Financial Crisis in 2008, we have not experienced a recession until 2020, and that was an extremely brief one caused by an extraordinary event. The longer we go without a recession, the more headlines will be calling for one. Just as with rebalancing, time is not a driver of recessions.  

Some economic data has been weakening throughout 2025. The labor market is not as strong as last year, but the unemployment rate remains low. At the same time, inflation has been a major factor for lower-income consumers, and we have been seeing spending data weaken for that group. However, higher-end consumer spending remains strong and accounts for most of U.S. spending, so it is this group that can help keep the U.S. out of a recession.

Data is at its weakest in years, but does that cause a recession? Unfortunately, no one knows for sure. For investors asking how to invest during economic uncertainty, the more practical focus is on rebalancing. Since we do not know when a recession or market drawdown will occur, preparing your investment portfolio for a recession means focusing on guardrails, not timing, when managing portfolio risk.

What Should Investors Review With Their Advisor Heading Into 2026?

Short answer: Heading into 2026, investors should review portfolio risk, diversification, and whether their investment strategy still aligns with long-term goals, spending needs, and changing personal or tax considerations.

Heading into a new year is often a natural time to step back and assess whether your portfolio and broader financial plan are still aligned with your goals. Rather than focusing on market predictions, investors should review portfolio risk, diversification, and whether current allocations remain appropriate for their time horizon and spending needs.

It can also be helpful to revisit assumptions that may evolve over time, such as income requirements, tax considerations, or upcoming life events. As part of an overall investment outlook for 2026, reviewing these factors with an advisor can help ensure decisions remain grounded in long-term planning rather than short-term market headlines.

If you haven’t reviewed your portfolio recently, heading into 2026 may be a good time to schedule a conversation with a financial advisor to confirm that your investment strategy still aligns with your long-term objectives and risk tolerance. The goal is not to predict what markets will do next, but to help ensure your plan remains prepared for a range of potential outcomes.

Allegheny Financial Group is a Registered Investment Advisor. The information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies.  The information included herein was obtained from sources which we believe reliable. The views in this article are being provided for informational purposes only. It does not represent any specific investment or tax advice and is not intended to be an offer of sale of any kind. Past performance is not a guarantee of future results.

Author: Joe Clark, CFA® | Allegheny Financial Group | December 2025