Investor Education • Market Cycles • Risk Clarity
Questions to Ask Any Broker, Right Now
When markets run hot for years, risk doesn’t disappear — it becomes harder to see. The purpose of this page is simple: help you replace assumptions with clarity.
Bring these questions to your next review meeting. Ask for written answers and keep them with your records.
Major Market Stress Events Within One Investing Lifetime
Severe market disruptions are not rare. They recur — often closer together than investors expect.
Prolonged equity bear market
Systemic financial crisis
Liquidity shock and rapid decline
Before the Reset vs After the Reset
The same portfolio can feel “safe” in normal markets and behave very differently when stress arrives.
Conditions feel normal
Before a Reset
- Volatility feels contained
- Diversification appears to work
- Liquidity feels unlimited
- Risk models assume normal correlations
- Plans are built around average markets
Stress changes behavior
After a Reset Begins
- Correlations spike across assets
- Liquidity disappears in key holdings
- Drawdowns exceed expectations
- Recovery timelines extend
- Emotional decisions increase
Market reality
Major losses rarely come from the risks investors are watching. They usually come from risks that were never stress-tested.
Questions Your Broker Should Answer With Documentation
You are not looking for reassurance. You are looking for clear answers supported with evidence.
Documentation to request
- Current allocation and rebalancing policy (in writing)
- Stress-test or scenario report tied to your actual holdings
- List of positions with liquidity notes (any restrictions or gates)
- All-in fee summary (advisory + fund/internal expenses)
Stress-test my exact portfolio
Show me how my portfolio would have performed during:
- 2000–2002 — Prolonged equity bear market
- 2008 — Systemic financial crisis
- 2020 — Liquidity shock and fast crash
What is my downside?
- Expected drawdown in a severe decline
- Worst historical drawdown using comparable allocations
- Expected behavior in a 40% equity decline
What is my liquidity under stress?
- Holdings that could become hard to sell
- Any restricted, gated, or thinly traded positions
- Speed of repositioning if conditions change
What is my concentration risk?
- Dependence on U.S. equities or mega-cap stocks
- Reliance on low rates or easy credit
- Assets that tend to fall together under stress
What is the plan if markets worsen?
- Playbook for a prolonged bear market
- Specific triggers for reducing risk
- Rules for defensive repositioning
Definition
A fiduciary process does not assume markets will behave normally. It prepares for environments where correlations rise, liquidity contracts, and price discovery becomes emotional instead of rational.
Market Reality
The largest portfolio losses historically have not come from the risks investors were watching. They came from risks that were assumed to be diversified, liquid, or structurally safe.
Fiduciary Doctrine
The responsibility is not to predict market turning points. The responsibility is to understand how portfolios behave when markets move through cycles and when those cycles create life-changing opportunities.
Warning Signs to Watch For
- Vague reassurance with no scenario math.
- “Diversification solves everything” with no discussion of correlation spikes.
- No conversation about liquidity under stress.
- No clear plan for prolonged bear markets.
Want a Clear, Stress-Tested View of Your Portfolio?
The best time to understand drawdown exposure and concentration risk is before markets force the lesson.
Request a Portfolio Risk Review