The past three years have been remarkably strong. I’ve had more than a few conversations with clients who’ve opened their quarterly statements with pleasant surprise at seeing their portfolio grow faster than expected.
Since the market bottom in October 2022, many clients with a typical balanced portfolio (60-70% global stocks, 30-40% bonds) have enjoyed annualized returns in the 14-15% range. That growth reflects not just market recovery from a difficult 2022, but sustained strength across U.S. markets and, more recently, meaningful gains in international markets too.
Here’s the conversation we want to have with you now, while things feel relatively stable: When you experience returns well above the long-term average, eventually you work your way back toward that average. Our investment philosophy at Team Hewins is built to help you navigate that reality with clear eyes and a solid plan for 2026—whatever it brings.
Understanding What an “Above Average” Year Really Means
There’s a temptation during stretches of strong performance to believe we’ve entered a new era, that higher returns are simply the way things work now. History gently, but firmly, reminds us that this kind of thinking tends to be problematic.
When your statements look good quarter after quarter, it’s natural to start thinking, “Maybe this is just how it works now.” One client recently told me she’d stopped feeling anxious about her portfolio for the first time in years. That confidence is wonderful, and I want to protect it. But protecting it also means being honest about what could come next.
The long-term average return of the stock market over the past century hasn’t changed dramatically. Some years, or stretches of years, run well ahead of that average, while others run below it. That’s not a flaw in the system; it’s exactly how averages work.
The strong three-year run we’ve just experienced doesn’t signal that anything is broken or about to break. It simply means that returns of 4-6% over the next few years would be completely normal. Not disappointing. Not a crisis. Just markets doing what they’ve always done: evening out over time.
Why We Don’t Try to Time Markets (and What We Do Instead)
We don’t deny that challenging markets could come. Instead, we walk through each potential “what-if” alongside you, while things are still relatively calm:
- “If this happens, here’s what we’ll do.”
- “Here’s how rebalancing will work in practice.”
- “Here’s why staying disciplined serves your goals better than reacting emotionally.”
I often think back to the 2008-2009 financial crisis, not because I expect that level of turmoil again, but because it taught me something important about human nature and investing. In 2008, the S&P 500 fell 38%.1ABC News. “Markets’ Fall in 2008 Was Worst in Seven Decades.” ABC News, 7 Jan. 2009, https://abcnews.go.com/Business/story?id=6563041&page=1. During that period, we rebalanced client portfolios multiple times (sometimes as many as three times), adding to stocks as they fell further and further below target allocations.
That required tremendous emotional fortitude. But the discipline held. And when markets finally did bottom and turn, the recovery was sharp and swift. What many people don’t realize is that some of the best days in market history happened right alongside some of the worst days during that period. If you waited for things to “settle down” before getting back in, you likely missed much of the recovery.
How Rebalancing Quietly Prepares You for What’s Next
During these past three years of strong returns, we haven’t been standing still. We’ve been doing the steady, disciplined work that matters most when markets eventually shift.
Here’s what that looks like in real terms:
- Say your target allocation is 60% stocks, 40% bonds. As stocks perform well, that mix naturally drifts, maybe to 65% stocks, for example, simply because of growth.
- Our discipline is to rebalance. We might take that extra 5 percentage points out of stocks and move it back to the more conservative bond portion of your portfolio.
- We’re essentially taking gains during the good times, which positions your portfolio to be more resilient if and when markets get choppy.
If returns do moderate or markets experience volatility in 2026 and beyond, we’re prepared to do the inverse: sell bonds and add to stocks at lower prices. With this investment approach, we make volatility work for you rather than against you.
Related: High-Net-Worth Financial Planning: Who It’s For, Why It’s Valuable, and How to Do It
The Myth of “Perfect Timing”
There has never been a day in my nearly 35-year career when I could confidently point to markets and say, “Ah yes, now things have truly settled down and it’s the perfect time to invest.”
There’s always something:
- Always a prognosticator predicting a crash
- Always geopolitical uncertainty on the horizon
- Always a reason to be concerned if you’re looking for one
That’s precisely why we don’t try to time the market. Instead, we help you build a strong foundation, diversify your holdings, create a clear plan for how you’ll respond, and then execute that plan with confidence when the time comes.
As Warren Buffett wisely reminds us: don’t get too greedy when markets are soaring, and don’t panic after they’ve already fallen. The ability to stay balanced on both sides of that equation is often what separates successful long-term investors from those who get whipsawed by their emotions.
Related: Smart Investing Means Tuning Out the Headline Noise
What This Means for Your 2026 Planning
As you plan for the year ahead, here’s how we think about what comes next and how we’ll navigate it together:
- First, let’s take a moment to appreciate what you’ve built. The strong returns over the past three years aren’t just numbers on a page; they represent real progress toward the life you’re working for. Whatever your goals are, you’re in a stronger position today than you were three years ago, and that matters.
- We’ll help you adjust expectations without creating alarm. More modest returns ahead aren’t something to fear, they’re a natural part of how markets work. Our job is to help you understand what’s realistic and keep your goals on track regardless of what markets do.
- Your portfolio has been quietly working for you. The disciplined rebalancing and strategic adjustments we’ve been making together have been preparing your financial life for whatever comes next. You’re not starting from scratch when volatility arrives; you’re already positioned.
- We’re here for the ongoing conversation. If your circumstances change, your comfort level shifts, or you simply want to talk through how you’re feeling about the road ahead, reaching out to us is exactly what this partnership is for.
The markets of 2025 have reinforced something we see every day in our work with clients: long-term success isn’t about predicting what happens next quarter or next year. It’s about having a trusted advisor who helps you stay grounded in a philosophy that works in all conditions—and who’s there with you, especially when the path forward feels uncertain.
An Investment Philosophy Grounded in Partnership
The past three years have been good to investors who stayed disciplined. But strong markets have a way of making everything feel easier than it actually is. The real test of any investment strategy isn’t how it performs when everything is going well; it’s how it holds up when uncertainty arrives and emotions start to override logic.
That’s where partnership matters most.
If you’re a current Team Hewins client and have any new questions about the year ahead, we’d love to connect. Having these conversations proactively helps ensure we’re aligned on your goals and prepared for whatever 2026 brings.
And if you’re not yet working with Team Hewins, we invite you to learn more about how our investment philosophy could support your financial future. Learn more about our Big Decision Clarity Session to explore whether our disciplined, relationship-centered approach is the right fit for your needs.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.
- 1ABC News. “Markets’ Fall in 2008 Was Worst in Seven Decades.” ABC News, 7 Jan. 2009, https://abcnews.go.com/Business/story?id=6563041&page=1.