We Just Had a Market Correction

On March 27, the Dow Jones Industrial Average officially entered correction territory (defined as a 10% decline from its peak) on the heels of the military conflict in Iran and the anxiety about the global economy it triggered.

It seems a surprise to many people that well-diversified portfolios have likely held up much better than the Dow in the recent volatility. It’s not hard to understand why. The Dow is the index most everyone looks to when they glance at their phone or TV to see what “the market” is doing any given day. What’s actually going on in the market beyond that iconic index seldom gets much, if any, attention.

It’s worth remembering, therefore, that the Dow reflects only a very specific segment of the equity market. This includes the stocks of the 30 largest publicly traded U.S. companies, including the likes of Walmart, Coca-Cola and Apple. Even the much broader S&P 500 is still heavily weighted toward the largest of large cap U.S. stocks.

The recent correction in the Dow illustrated the potential benefits of being diversified into other areas of the market. This was observed this quarter in the performance of asset classes such as small value stocks and U.S. REIT stocks:

Q1 2026 Index Performance (January 1 – March 31, 2026)

Source: Bloomberg L.P.

One benefit of the institutional, asset-class funds we use in our portfolio strategies at CAM Investor Solutions, is that they can help us to effectively diversify beyond the narrow market segment the Dow encompasses. To be sure, this potential benefit isn’t as evident when well known large cap stocks lead the market for months or even years. Over the long run, however, including these other asset classes can help provide a buffer when things turn south for the large cap stocks in the Dow and S&P.

A Disciplined Institutional Process

There is a reason why large, institutional investors such as public pension funds and endowments make decisions strictly within the framework of their Investment Policy Statements (IPS). These statements are the foundation of their investment process and can act as a guardrail against emotion driven investing. They also establish parameters within which their investment advisors must also operate.

Emotions can run to both extremes in the stock market at different times. Usually, we think of investors being fearful and reactionary in times of extreme volatility in the market, like 2001, 2008 and 2020. But investors can be just as reactionary in the times of “irrational exuberance” like we saw in the late 1990s and again in the mid 2000s. Those types of market environments can be just as tempting to let emotions rule investment decisions.

Stock Gains Can Add Up After Big Declines

FAMA/FRENCH TOTAL US MARKET RESEARCH INDEX RETURNS (July 1926 – December 2025)

Source: Dimensional Fund Advisors

So, when these large pension and endowment funds create comprehensive investment policies that govern their decision making, it isn’t just for show, or for legal cover. It’s also to help take the risk of emotional decision making and bad guessing off the table for the people who make the decisions. Market extremes can be tempting to institutional investors, too. After all, there are still humans behind the institutions, subject to the same emotions we all are.

All of which sums up the exact reason we carefully draft Investment Policy Statements (IPS) for our clients at CAM Investor Solutions. In anxious times such as we all are experiencing currently as it relates to politically, socially, emotionally, the IPS is the road map both we (as the advisor) and you (as the client) use to navigate such challenging times more thoughtfully.

As always, we are here to help.

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Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices or categories. Need to add more disclosures.

About CAM Investor Solutions

CAM Investor Solutions, a fee-only independent Registered Investment Advisor, has offices located in Colorado, Florida, and Texas. As a growing wealth management firm, we focus on the needs of our clients to improve their quality of life. Our firm’s commitment to innovation through rigorous academic research enhances how we serve a multi-generational audience.

CAM’s Specialties Include:

• Managing concentrated wealth
• Planning for stock and option compensation / company IPOs 
• Advanced tax managed investment strategies
• Custom retirement income strategies
• Cash management

Contact:
CAM Investor Solutions
info@caminvestor.com
1-844-247-0787
https://caminvestor.com

CAM Disclosure

SOURCE: Bloomberg L.P. and Morningstar Direct

M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. 

This blog has been provided solely for informational purposes and does not represent investment advice. Nor does it provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy.

Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.