From the tariffs to today: what worked, what didn’t, and why we tweak
- Tariffs shook markets last year. Here’s a check on how the three-bucket framework held up.
- The real test wasn’t returns — it was whether the framework kept clients from selling at the worst moment.
We closed the books on the first half of 2026, and I’ve been thinking a lot about where we were a little more than a year ago.
April 2, 2025 marked the start of a tumultuous stretch. Tariff headlines hit every hour. The S&P 500 plummeted. Volatility spiked to levels not seen in years. Most of our clients, to their credit, know markets have rough patches — but some called us, worried, and advisors across the industry were fielding a wave of anxious calls.
That was the environment when we first wrote about our three-bucket framework: money you’ll need in the next 12 months sits in something stable, like a money market fund (a low-risk, cash-like investment); money you’ll need in the next two to five years sits in bonds, for income and stability; and money you won’t need for five years or more is invested for growth, in assets like stocks.
What happened
Markets fell hard after tariffs were announced on April 2. In the week that followed, the S&P 500 posted its worst weekly performance since March 2020. The index briefly fell into correction territory — a drop of 10% or more from a recent high — before a 90-day tariff pause announced on April 9 triggered one of its best single-day rallies in years. By early May, the market had recovered the ground it lost, according to an Institute of Business & Finance report.[1]
The rout, in the moment, felt like it might not stop. Then policy shifted, and markets turned around — a good reminder of an idea legendary investor Howard Marks often returns to: we never know what the next event will be, but there will be one. “You Can’t Predict. You Can Prepare” is the title of his memo on the topic.[2] That’s also the premise behind the bucket framework. A financial plan isn’t built around predicting the next shock. It’s built so the shock matters less when it comes.
The results
- Bucket one: steady and ready. The cash and money-market portion did exactly what it’s there for. It exists so that when a client needs money during a downturn, there’s a place to draw it from without touching stocks. It held up as intended, providing a modest return while clients waited out the volatility — the work of making sure near-term spending never depended on where the market happened to be on a given day.
- Bucket two: the quiet stabilizer. Bonds were the least exciting performer of the three. They stayed relatively stable, which is what they’re supposed to do, but they haven’t been the strong performer some investors hoped for coming into this cycle. The point of the bond bucket was never to be the hero. It was to be there, predictably, so clients weren’t forced to sell stocks at the worst possible moment to cover years of spending. On that narrower measure— stability, not return —bonds did what we expected.
- Bucket three: built for growth. The growth money— the portion not needed for five years — behaved the way it’s designed to over a full cycle. We used the volatility to add to positions we believed in and to reposition parts of the portfolio at better prices. Clients who stayed invested through the drop and the snapback avoided locking in losses at the worst possible moment. That’s the outcome the framework is built around — not a guarantee of any particular result.
A tense conversation
Here’s the kind of call we and others in the industry heard last spring. It’s why this framework exists.
One client, no longer working, phoned in rattled. The market had dropped, the headlines were dire, and the instinct — an understandable one — was to sell. Our advisor did what we train our whole team to do: we didn’t argue with the fear; we did the math. We walked through what the client spends in a year. We showed them what was sitting in bucket one, in stable, cash-like holdings, enough to cover the next twelve months without touching a single stock. Then we walked through bucket two, the bonds, and showed how many more years of spending that covered. By the time we added it up, that client had 6 years of living expenses sitting in cash and bonds before we’d ever need to sell a share of stock during a downturn.
That’s the conversation that calms a room. Not a prediction about where the market goes next — nobody can honestly offer that — but a clear-eyed look at a client’s own numbers and time horizon. When a client can see that a market drop doesn’t touch the money they need next year or the year after, the anxiety tends to lift. We didn’t have to predict where markets were headed. We just had to show them their near-term spending didn’t depend on the answer.
Interestingly, we’ve also seen the mirror image of that fear over the past several months. Markets were actually performing well, but we fielded a wave of concerned calls — because a bad news cycle had convinced people the market was falling apart when it wasn’t. That’s a reminder that the anxiety clients feel isn’t always about what’s happening in their portfolio. Sometimes it’s about what’s happening in the headlines. The bucket conversation works the same way in those cases: it pulls the discussion back to the plan and away from the noise.
Not every conversation looks the same, either. Older clients with far more than they’ll ever spend sometimes ask us the opposite question — why hold any stocks at all if the money might outlive them? That’s usually a conversation about who the money is really for. If it’s for children or grandchildren, the real time horizon isn’t the client’s own life expectancy. For clients wired to take action the moment something looks wrong — business owners, executives, people used to solving problems by doing something — the advice we give can be hard to follow: do nothing. Let the plan work.
Looking ahead
One year on, the framework did what it was designed to do. Like any system, it needs tweaking, and that’s something I’m always thinking about.
We don’t know what the next event is going to be. We never do. We just know there will be one, and the job isn’t to predict it. The job is to make sure the money clients need soon is available.
We’ve also learned to be more precise about communicating the role of bucket two. Bonds did their job as a stabilizer, but “stable” and “high-returning” are not the same thing. We’re clear with clients about which one we’re aiming for with that part of the portfolio.
Mostly, though, the past year confirmed something simpler: the framework isn’t really an investment strategy. It’s a way of turning an abstract fear — the market is falling, what do I do — into an answerable question: how much money do I need, and when do I need it? Markets will always give us a next thing to worry about. Tariffs were spring 2025’s version. Something else will be next spring’s.
The three buckets are set up so that when it arrives, clients won’t have to guess about their spending money. They’ll be able to do the math. That, more than any single quarter’s returns, is what we mean when we say the framework held up over a difficult stretch.
We’re built for this. Anyone who’d like to talk through the framework and planning is always welcome to reach out.
Quick answers
- What is the three-bucket strategy? It’s a way of organizing your money by when you’ll need it: bucket one (next 12months) stays in stable, cash-like holdings; bucket two (two to five years out) sits in bonds; bucket three (five-plus years out) is invested for growth. The goal is to make sure a market drop rarely forces you to sell stocks at the worst possible time.
- Does this mean I can’t lose money? No. Investing always involves risk, including the possible loss of principal, and the buckets don’t guarantee any particular result. What they’re designed to do is reduce the odds that a downturn forces you into a bad decision at the wrong moment.
- How often should the buckets be adjusted? We review them as part of your regular planning conversations — life changes, spending needs, and market conditions can all shift how much belongs in each bucket over time.
Sources
- Institute of Business and Finance: Weekly Drops of S&P 500 by 5% or More
- Oaktree Capital: Howard Marks memo, “You Can’t Predict. You Can Prepare” (November 20, 2001), https://www.oaktreecapital.com/docs/default-source/memos/2001-11-20-you-cant-predict-you-can-prepare.pdf
Disclosures
Gryphon Wealth, LLC is an investment adviser registered under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. For more information, please visit adviserinfo.sec.gov and search for our firm name.
Investing involves risk, including the possible loss of principal. This material is presented solely for informational purposes and has been gathered from sources believed to be reliable; however, the adviser cannot guarantee the accuracy or completeness of such information. Nothing in this presentation is intended to serve as personalized investment, tax, or insurance advice. Advisory services are only offered to clients or prospective clients where the adviser and its representatives are properly licensed or exempt from licensure.
Opinions expressed are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Any opinions expressed are current only as of the time made and are subject to change without notice.
Past performance is not indicative of future results. This article was created with the assistance of artificial intelligence as part of the research and drafting process.