Prepare for the decline.
Be ready for the opportunity.
Protect what your capital makes possible. Consider precious metals where they serve a purpose. Prepare to buy productive investments at better prices.
Imagine investments you wanted to own becoming available at half the price. Would you have the capital—and the confidence—to buy? Or would you be waiting for your own portfolio to recover?
That is why I look beyond the decline itself. A substantial loss can consume years of recovery. Capital preserved through that same decline may give you the ability to purchase more ownership at a lower price. Both consequences deserve a place in the plan.
A deep loss changes the starting point for everything that follows.
Meanwhile, retirement spending continues. Withdrawals during the decline can make the climb back harder.
Consider the purchasing power of the same $100,000 available to invest.
You would own more units from that purchase. What they ultimately earn or become worth remains uncertain.
Illustrative arithmetic—not strategy performance or a forecast. Left: a 50% loss requires a 100% gain to recover, excluding withdrawals. Right: $100,000 divided by a hypothetical unit price of $100 or $50. Each block represents 250 units. Assumes the full $100,000 is available at either purchase price; it does not assume an investor can avoid a decline, preserve that amount, or identify a market bottom. Both illustrations exclude fees, taxes, income, and inflation.
I want to examine what can be protected before a reset, what could remain resilient through it, and what would make a lower-priced investment worth buying. Precious metals may have a role: if they hold up better than equities, a portion could later be exchanged for more equity ownership. That relationship is possible, not assured.
The opportunity begins with having capital available—and a plan for using it when value improves.
What are investors paying for the economy—and what are they paying for the earnings it produces? The Buffett Indicator and Shiller CAPE put those questions at the center of my work.
My concern about a major reset begins here. I believe investors are paying prices that leave too little room for disappointment. A great company, a powerful technology, or a growing economy does not make every purchase price reasonable.
Before asking how much further a market can rise, I want to examine how much of its future success is already in the price.
The U.S. stock market is valued at about 2.35 times annual GDP. This reading is roughly 1.80 times the provider’s recent 20-year average.
Reference: 130.53%, GuruFocus’s recent 20-year average. This is the standard market-cap-to-GDP measure, without a Federal Reserve balance-sheet adjustment.
GuruFocus · View source →Total stock-market value ÷ annual U.S. economic output.
This comparison puts the price of the U.S. stock market alongside the scale of the economy beneath it. It asks how much investors are paying for ownership relative to the economic activity supporting those businesses.
I use it to challenge the idea that rising prices, by themselves, confirm a sound investment. A market can keep advancing while the price paid becomes harder to justify.
My Buffett Indicator page examines the valuation gap, historical context, and what that means for someone depending on a portfolio for retirement.
EXPLORE THE EVIDENCEBuffett IndicatorInvestors are paying about $40.73 for each $1 of ten-year average inflation-adjusted earnings. That is roughly 2.34 times the series’ historical mean.
Reference: historical mean 17.42×. Multpl reports a historical monthly maximum of 44.19× in December 1999. This current estimate is not Shiller’s monthly data release.
Multpl · View source →S&P 500 price ÷ ten-year average inflation-adjusted earnings.
This comparison looks through the fluctuations of a single earnings year. It asks how much investors are paying for earning power measured across a longer period.
I use it to question whether a retirement plan is assuming too much from investments bought at demanding prices. Strong businesses still need time to earn what their valuations already anticipate.
My Shiller page puts the measure alongside earlier valuation extremes and examines why the starting price deserves attention before committing capital.
EXPLORE THE EVIDENCEShiller CAPEDated snapshots, checked September 11, 2026; not live feeds. The gauges use different units, scales, and historical reference periods. Averages are context, not fair-value targets. Animation illustrates the readings; it does not measure crash probability, expected losses, or when prices will turn.
I want these valuation questions to affect the decisions we make. How much equity exposure is justified? What loss could the retirement plan absorb? What capital should remain available? What would make an investment attractive enough to buy more?
The same discipline applies on the other side of a reset. When prices become more reasonable relative to the economy and earnings, I want to reassess the opportunity with the same seriousness that led me to question the risk.
Neither indicator supplies a crash date, a guaranteed loss, or a precise buying signal. They measure related aspects of valuation, not independent proof of an inevitable outcome. Economic structure, overseas earnings, accounting changes, and the historical baseline affect interpretation. Expensive markets can continue rising.
Read both analyses. They explain why I believe preparation deserves attention now—and why lower prices could eventually give us a very different reason to act.
A percentage loss and an equal percentage gain do not cancel each other. The deeper the decline, the larger the subsequent gain needed just to restore the starting value.
Mathematical relationships, not forecasts. Required recovery = loss ÷ (1 − loss). Rounded where shown. No withdrawals, contributions, fees, taxes, or inflation are included.
For a retiree taking distributions, the challenge can be greater. Selling investments to meet expenses during a decline leaves fewer shares participating in a later recovery. Returning to an old index high does not necessarily restore the household’s account—or its purchasing power.
In The Psychology of Staying Invested at the Wrong Time, I explore why intelligent, disciplined people can recognize risk and still find it difficult to respond.
The book examines the pull of an old account high, the comfort of a familiar investment story, the reassurance of the crowd, and the reluctance to reconsider a position held for years. It also examines changing market leadership, inflation, interest rates, and the particular demands of retirement withdrawals.
One question runs through that work: If you inherited your portfolio in cash today, would you choose to rebuild what you already own?
Your answer may reveal a gap between a portfolio accumulated over time and one you would deliberately choose now. Taxes, income needs, and other constraints matter when deciding how to address that gap.
The book explains the framework. This page explains how I bring it to my work—and the conviction that makes that work especially urgent to me.
View the book on Amazon
From the book by Wilder Bailey
John Templeton looked for investments where pessimism had driven prices down. Warren Buffett has emphasized value, financial strength, and the discipline to resist the crowd. Those ideas require independent judgment before a decision feels comfortable.
Templeton’s search for bargains and Buffett’s willingness to wait for attractive opportunities inform how I think about price. Their approaches are not identical to mine. Buffett also advocates low-cost index investing for many investors and has been explicitly critical of gold. My case for precious metals is my own.
Read the Templeton Foundation biography and Buffett’s 2004 and 2011 shareholder letters.
Assess valuations, concentration, withdrawal needs, and the amount of loss a household can absorb. Decide what capital needs to remain readily available.
Manage liquidity and risk. Consider assets that respond differently to economic stress, including an appropriately sized precious-metals allocation.
Reassess business quality, prices, and risk. Use a written process for buying in stages while maintaining the resources needed for retirement income.
I take gold seriously because financial stress can involve confidence in money as well as confidence in companies. An asset with different sources of demand can serve a useful role when familiar portfolio relationships change.
The World Gold Council’s research documents gold’s diversification potential during periods of market stress. It also acknowledges volatility, periods of underperformance, and the absence of regular income. The Council is a gold-industry organization; its research should be read with that perspective in mind.
If gold holds its value or rises while equities fall, selling a portion of that gold could finance more equity ownership than it could before. That potential change in buying power is part of the reason I consider metals within a broader plan.
It is conditional. Gold can fall too, including during a rush for liquidity. Silver and mining shares have different risks and should not be treated as interchangeable with gold bullion. Metals do not replace a plan for meeting expenses.
Position size, the investment vehicle, custody, costs, taxes, and the reason for holding it all matter. I would also want a reason for reducing the position when other opportunities become more attractive.
The objective is to keep evaluating where capital can do the most useful work.
A plan that reduces risk but never explains how to increase investment exposure again is unfinished. Fear can keep someone out of a reasonably priced market just as confidence can keep someone in an expensive one.
I want the buying process discussed before a difficult market arrives: what makes an investment attractive, how purchases could be staged, how much liquidity must remain, and what evidence would change the decision.
Lower prices alone do not make an investment a bargain. Earnings, debt, business durability, and the price paid relative to those fundamentals still matter. Nor can anyone count on recognizing the bottom.
My willingness to become more constructive when value improves is essential to the approach. Caution needs a purpose, and that purpose includes being prepared to own more when the opportunity justifies it.
I believe we are facing the possibility of a massive market reset—one that could be among the most consequential of our lifetimes. I believe it could begin soon, and that regaining today’s market values afterward could take years.
That is my conviction and risk assessment, not a reliable forecast of when markets will turn or how far they will fall. I can be early. I can be wrong. The depth and duration of any recovery are unknowable in advance.
But I do not believe uncertainty excuses leaving the exposure unexamined. My responsibility is to bring my judgment to the work, explain it clearly, and build a plan that can adapt as the evidence changes.
I would rather have a difficult conversation about preparation today than discover, after a major loss, that we never had a plan for it.
You do not have to share every part of my outlook to benefit from a careful conversation about risk, income, and opportunity.
My story is larger than I can put on a page. A brief visit gives us the opportunity to discuss your circumstances, examine how I think, and decide whether working together could be a good fit.
Bring your concerns about today’s market and the retirement you want your money to support. Ask me about the book and the approach behind it.
Start a conversationWilder Bailey · Watkinsville, Georgia
Wilder@BaileyFS.net
The broader argument for examining portfolio risk before a major reset.
Earlier market resets, seen through the uncertainty of their own time.
Why recognizing risk and responding in time matter.
Prepared September 11, 2026. Sources accessed on that date.
Bailey Financial Services, Inc. is a fee-only, state-registered investment adviser. This page reflects Wilder Bailey’s analysis and opinion and is provided for general informational and educational purposes. It is not individualized investment advice or a recommendation to buy or sell a security or precious metal. All investments involve risk, including loss of principal. Neither diversification nor a defensive allocation guarantees protection or superior performance. Past performance does not guarantee future results. Decisions depend on individual circumstances, objectives, taxes, costs, and liquidity needs.
References to John Templeton, Warren Buffett, Robert Shiller, Berkshire Hathaway, the John Templeton Foundation, and the World Gold Council are for educational context. Bailey Financial Services is not affiliated with these parties; no compensation is paid or received for these references, and the references do not imply endorsement in either direction. Their approaches and circumstances differ from those of a household drawing retirement income.