Left of Bang: Preparing Financial Portfolios for Market Volatility
Adapted from a letter I sent to my private wealth management clients on March 12, 2025
“‘Left of bang’ means before the bad stuff happens. That’s where you want to be—alert, ready, prepared to respond to protect yourself and your loved ones.”
In his book, Left of Bang: How the Marine Corps' Combat Hunter Program Can Save Your Life, Patrick Van Horne explains how a “left of bang” readiness mindset is used by U.S. Marines to better identify, prepare for, and take proactive action against negative “bang” incidents, such as ambushes, IEDs, and sniper attacks.
Left of bang describes a timeline moving from left to right, with the “bang,” or negative event, occurring in the middle of the timeline. The key idea is to use situational awareness, preparedness, and environmental understanding to take proactive action “left of bang”—before the negative event occurs.
It is valuable to use the left of bang mindset and approach in the investment and financial planning world.
My team’s financial planning process looks for risks and recommends protection planning techniques, such as emergency funds, insurance coverage, estate planning, and asset structuring, to minimize the financial impact of life’s negative events. Our investment approach is designed to not only capture long-term growth left of bang, but importantly to be able to fund clients’ goals during the investment world’s “bangs” with high-quality bonds, as well as interest income and dividends, rather than needing to sell securities at low prices.
Situational Awareness
We may be approaching or in the opening salvos of a financial “BANG” moment now.
Stocks surged again in 2024. Better said, some stocks surged again in 2024, leading to an even more concentrated market with a few of the most expensive, bid-up, stocks attracting an oversized helping of new investment dollars. We’re currently experiencing some rocky trading days, and it appears a market rotation—the beginnings of a “flight to quality”—may be underway. It is not a surprise that big technology companies—the “hot money” area of the market—are coming under pressure.
Additionally, the numbers show that inflation is persistent, and economic indicators, such as gross domestic product (“GDP”), retails sales, home sales, and housing starts, are all down in recent readings. Another quarter showing a negative GDP reading will likely bring the dreaded declaration of a recession.
The Trump administration’s blitzkrieg on governmental spending is intended to fight our nation’s massive debt load and improve economic prospects in the long-term; however, in the shorter-term, it’s easy to see that these actions can deliver a blow to consumer confidence and spending and shake our economic system along the way to the intended improvements. Tariffs and trade wars add to the economic “fog of war” and sense of uncertainty so reviled by markets.
This is worth paying attention to because consumer confidence matters in the economy and the financial markets. Economist have long cited that consumer spending comprises two thirds our economy, and in the stock market people sell when they are not confident in future prospects.
Plan of Action
What now? How do we operate Left of Bang?
Here is our three-step plan of action:
Be Prepared
Realize that through our planning and portfolio work, you are prepared for financial downturns.
Our approach has always been to coordinate your investments and financial planning needs to build a “left of bang” portfolio that will carry you through downturns and not rely on trying to outguess or outrun the market in short-term swings.
We have stayed diversified by consciously avoiding chasing returns and becoming overexposed to the hottest sectors. With our mix of investments, we’ve aimed to balance risk and reward, knowing that there will be downward bear markets throughout a long-term investor’s experience.
In 2025 we’ve already experienced solid relative performance from our international stock holdings, an investment category many had given up on. I’ve also been very happy with several of our “satellite” portfolio holdings which include profitable, value-focused stocks. If a broader market sell-off emerges, I expect these holdings to become defensive positions.
A couple of points to keep in mind:
Our retired clients are invested with a similar investment management approach to retirees in past bare markets who did not need to make major modifications to their financial plans.
Our clients working to accumulate wealth should view market downturns as great opportunities to buy company ownership at low cost.
Most importantly, with diversified portfolios, we do not want to “sell low,” locking in losses and missing the inevitable recovery.
Although we can never predict the future, it is reassuring to remember that stock markets have recovered from 100% of past bear markets. Not all individual company stocks have recovered; in fact, many have fallen victim to economic crises, but the broad basket of company stocks has been a wealth builder throughout the ages, despite suffering many bear markets along the way.
Everyone’s situation outside the market is unique though, so if you think your job is at risk, or you have other circumstances in your financial situation that may be uniquely at risk, or you need more cash on hand than usual, please let us know so we can talk it through!
2. Have Resolve
Market ups and downs are a normal part of the investing process. As important as it is to remember that we are working to prepare your portfolio’s holdings for market downturns, it’s equally important to prepare yourself mentally for these market periods.
It was almost exactly five years ago when I wrote to my clients about the brutal facts of the Covid-19 related stock market crash and likelihood of a pandemic-induced recession (“Investing During a Pandemic: Use a Stockdale Mindset”). I encouraged clients to adopt a “five-year mental and financial fortress” mindset:
“…we developed financial plans and portfolios that aim to insulate near-term (up to 5 years) financial needs from stock market risks. Holding cash, money market, and bonds to cover these near-term needs can provide a safe haven pool of assets to draw from in times of stock market stress.”
On that day, the S&P 500 closed at 2,398. As of this writing, the S&P 500 stock index is twice as high, at approximately 5,600!
In our experience, investors who have resolve and maintain prudently diversified portfolios are more likely to see rewards in the long-term, despite many trials along the way.
3. Seek Opportunity
Know also that we, and the fund managers we have allocated capital to, will be looking to capitalize on the opportunities that typically emerge during periods of market turmoil.
A few of the investment themes I have built into our asset allocation models, which I expect will play out well over time:
U.S. large growth companies, particularly those in the technology sector, have looked expensive, and the market has been highly concentrated in this sector. We have leaned portfolios toward more attractively-priced “value” stock companies. This has been a near-term defensive position and also a long-term opportunity play. Value stocks have historically turned in comparatively high long-term returns.
Smaller company stocks, particularly those with fair valuations and strong profits, have looked attractive.
International stocks are considerably cheaper and offer a richer dividend than U.S. stocks, on average. We should not forget that there have been periods where international stocks have significantly outperformed the U.S. This has been the case in the beginning of 2025.
Confidence Amidst Chaos
The current market and economic concerns may blow over quickly, as so many have in the past, or we may need to ride through a period of financial downturn. I am confident that we have done the work left of bang to be prepare your financial plan to weather the markets and help you reach your financial goals.
We want you to also feel confident amidst market chaos, so if you have questions now or in the future, please do not hesitate to contact us.
Thank you,
Scott