Those who have read my columns over the years know that I’m comfortable with risk, whether it’s dropping into a steep ski line or pointing a bike downhill with more confidence than caution, because I’ve always been drawn to the edge where skill meets consequence. That instinct did not stop with me, and I see it clearly in my kids, especially my oldest, whose appetite for risk has stretched well beyond anything I ever attempted at the same age and has deepened my understanding of what risk really means.

In investing, we talk constantly about

volatility

, a word that sounds a bit too clinical but in the end simply describes the ups and downs along a chosen path. I tend to think of it the way skiers classify terrain. Green runs are forgiving and predictable, blue runs demand more skill, black diamonds narrow the margin for error and double black diamonds leave almost no room at all, so as the slope gets steeper and more technical, the rating rises along with the adrenaline. The real danger, though, has never been the run itself, but the kind of crash that leaves you unable to ski another day.

That distinction matters because volatility is discomfort, while true risk is the loss of mobility, the inability to keep moving forward as you once could. Experience, preparation, and confidence certainly improve the odds but even skilled participants still crash when conditions turn or when judgment slips for a moment.

Markets work much the same way, as some paths produce exceptional returns, others quietly underperform, and the risk that truly matters is not short-term discomfort along the way but the probability of permanent damage. A bad decision at the wrong moment can take you out of the game entirely, just like a mistimed turn on a steep face or launching off a cliff without first spotting a safe landing.

When I look at today’s market environment I see a slope that has shifted from green runs to black and double black diamonds, with many investors being tempted onto far more challenging terrain just as conditions have rapidly deteriorated.

The surface may look manageable from a distance, but underfoot it’s icy, steep and far less forgiving than usual, and some crashes have already happened, including the

S&P 500

posting one of its weakest quarterly performances in nearly four years and even so-called safer balanced

portfolios

suffering their largest one-month drop since 2022.

This is where judgment matters more than courage, and as a former mentor recently reminded me, “Marty, you’ve got to use bad judgment until you know what good judgment is.”

Even the best skiers pull back when conditions turn ugly by adjusting their line, slowing things down and choosing a route that lets them stay upright and keep skiing for another day, because that decision reflects respect for the environment. Markets, like mountains, do not reward bravado for long, and over time that discipline matters far more than any single run ever could.

Bringing this back to today, we believe investors should get help navigating these steep ups and downs, because having someone guide you down safely is always better than being taken down in a sled. Just as the right equipment matters on a hard, technical slope, portfolio construction matters in a market such as what we see now. This may mean reducing reliance on government bonds, which have recently failed to provide the downside protection many expect, and adding tools such as structured notes designed to help manage drawdowns while still participating in recovery.

In the same spirit, a modest allocation to real assets such as

gold

and materials producers can provide ballast if policy conditions shift again, particularly if renewed money printing emerges as countries sell U.S. Treasuries to raise cash in response to persistently high

energy prices

.

The goal is not to prove you can ski the steepest line, but to stay in the game with enough control to compound outcomes over many seasons. And if you are my son, throw in a cool flip every once in a while, to add a touch of your own style. Just make sure there is some soft powder in case you don’t land.

Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc., operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning. The opinions expressed are not necessarily those of Wellington-Altus.

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