When Markets Go ‘Below Deck’: The Portfolio Strategy Built for Stormy Conditions
Here's how to manage market chaos and drama — and what I'm doing right now in portfolios.
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Listen In as Our Portfolio Managers Navigate the Treacherous Market Environment
As I write this, I’m mindlessly watching Below Deck — the reality show where a yacht crew scrambles through demanding clients and sudden crises. The crew often freezes for a split second with that classic “deer in the headlights” look when everything hits at once.
Right now, the markets feel strikingly similar. There’s a palpable sense of disbelief and frozen reaction to the ongoing conflict.
Where We Are Now…
Liquidity is spotty, and price action has turned highly reactionary, swinging wildly on every headline. In this environment, it’s easy to panic, chase the noise, or freeze — but that’s exactly when a disciplined approach matters most.
Scaling Positions and Adapting
My portfolio strategy is built for exactly these chaotic moments. I manage risk by scaling positions in and out gradually, always weighting probabilities, enforcing strict risk rules, and maintaining broad diversification inside a balanced core-plus framework. Instead of reacting to the latest headline frenzy, the focus stays on staying calm, methodical, and resilient — protecting capital while positioning for the opportunities that emerge once the dust settles.
Here are recent examples of how this approach has played out in real time:
- Being long gold and silver when they were still sleepers, then calling for silver to outperform gold while most investors were abandoning it — followed by trimming exposure after the sharp exponential rally (I still own both, just at lower weights)
- Steering clear of private credit early, before weakness appeared, even as crowd enthusiasm peaked
- Advocating increased international stock exposure early in 2025 when consensus dismissed it because the U.S. looked unstoppable
- Suggesting gradual reductions in large-cap tech exposure throughout 2025 amid widespread optimism
- Highlighting Hershey (HSY) while the market fixated on AI, and flagging Robinhood (HOOD) as an early warning sell signal if support broke
What I’m Doing Now in Portfolios
Right now, the active portion of my strategy is
- Tilting toward greater exposure in mid-cap and small-cap companies, which have growth opportunities from domestic demand, are profitable, and still relatively inexpensive compared to the big well-known crowded names.
- I’m also seeing early signs that emerging Asia remains undervalued, with potential for a meaningful performance boost if uncertainty around Iran eases.
- Keeping a reasonable amount of funds in fixed-income securities and encouraging adding to portfolios to be ready to deploy more capital.
- Allocating to managed futures, precious metals, and select private equity.
Of course, not every call works. With the more active component of my strategy, when the thesis shifts or risk rules trigger, reducing exposure promptly — sometimes taking losses quickly rather than hoping for a turnaround is best.
In portfolio management, being right or wrong on any single idea isn’t what counts. What matters is how much you gain when you’re right versus how little you lose when you’re wrong over the long run. Oh yes, and past performance does not represent future results.
The Core-Plus Concept Is a Winning Robust Strategy
I eat my own cooking. My writing is also representative of this fact. My articles are not a short-term trading manual. They adhere to a core-plus portfolio strategy with a meaningful core invested for the long term. The “plus” portion are investments or trades in selective, scaled active tilts grounded in probability and risk management.
The goal in this low-liquidity, headline-driven chaos is simple — don’t chase the noise or freeze in the headlights. Build and maintain a resilient, probability-based portfolio that can weather volatility and still capture opportunities as they appear.
Just like the yacht crew that regains composure and executes its plan, the edge comes from disciplined scaling, diversification, and risk control when everyone else is panicking.
What Do You Think?
I’d love to hear from you in the comments below. What is one investing rule or principle you personally live by that keeps you grounded during chaotic, “deer in the headlights” markets like this one — and why does it work for you?
Drop your thoughts and your rule below. The smartest conversations (and best portfolio ideas) always come from readers like you.
@louisllanes
