Don’t react to year-end seasonal volatility, but don't tune-out, either

Investors should take advantage of the lull over the summer period to reflect, step back and review portfolios, according to Escala investment advisers and partners Scott Carmichael and Juliana Raikovic.

They say the period is an ideal checkpoint for investors to consider whether their personal circumstances have shifted and whether their investment approach still fits. Carmichael points to a few triggers for revisiting investment strategy.

“Where investors have experienced meaningful shifts in family, career, business, or financial position, it may be appropriate to adjust the investment strategy to reflect those new realities,” he says.

A change in capital or income needs can also force a more practical portfolio recalibration. Carmichael notes that investors should re-examine liquidity requirements, spending plans and cash-flow expectations if their circumstances have evolved. “This is often the most practical driver of portfolio adjustment at year end,” he says.

Raikovic (pictured) says that even though the summer period is quiet, an investor’s approach to their portfolio shouldn’t be short-term in nature.

“We refocus clients on long-term objectives, not a few weeks of reduced liquidity or headlines in a 24-hour news cycle. We ensure that portfolios remain diversified and liquid so that investors can move through this period without needing to react to short-term market moves,” she says.

Both advisers agree that the end of year is the perfect time for investors to give their portfolio a health check, and test whether strategic settings still make sense rather than chasing momentum into the new year.

“For long term investors, this period is best approached by reconfirming strategic asset allocation rather than chasing late-year momentum,” he says. “Is the portfolio still aligned to long-term objectives? Is rebalancing back to the strategic long-term asset allocation target required? These are the key questions.”

Raikovic adds that 2025 has unfolded differently from the usual seasonal script. While many years see a softer August in northern hemisphere summer followed by a late year “Santa Claus rally”, this year has inverted that pattern.

“Markets rallied through August and September,” she says, “and November has instead brought a pullback in some of the tech names that had run very hard as questions emerge around the sustainability of AI-related capex and spending.”

Still, both advisers say the broader discipline matters more than any calendar effect. For investors with planned drawdowns or income needs, it is essential to ensure cash coverage is in place. Beyond that, they say the best results typically come from sticking to long-term allocation plans and diversification.

“Ensuring any planned withdrawals or income requirements are covered is important,” Raikovic says. “But the best approach is to stay disciplined and avoid reacting to seasonal volatility. That way clients can enjoy the festive season with their loved ones and not be focused on the news cycle.”

James Dunn

James is an experienced senior journalist and editor of The Inside Network's publications.