Government Shutdowns, Market Bubbles, and Your Retirement Strategy

Active Portfolio Management for Retirement: Why Market Timing and Risk Assessment Matter for Pre-Retirees

In today’s volatile market environment, pre-retirees need more than autopilot investing—they need personalized investment management with direct access to portfolio managers who actively monitor risk. In this episode of The Tom Dupree Show, Tom Dupree, Jr., Mike Johnson, and Hudson Kemp discuss why active portfolio management is critical for retirement success, especially when the S&P 500 reaches record highs and market valuations signal increased risk.

Unlike large financial firms that rely on quarterly rebalancing and assigned investment counselors, Dupree Financial Group provides Kentucky retirement planning with a team approach that monitors portfolios daily. This episode reveals why understanding what you own—not just how much you have—makes the difference between panic-selling during downturns and confident retirement living.

Key Takeaways from This Episode

• Market Risk Assessment: The S&P 500’s current risk level sits around 8-8.5 on a 10-point scale due to high concentration and elevated valuations
• Active vs. Passive Management: Daily portfolio monitoring beats quarterly rebalancing for pre-retirees approaching retirement
• Income-Focused Strategy: Building dividend and interest income that compounds over 5-10 years provides stability during market volatility
• Value Investing Opportunity: When markets hit records, shifting to treasury bonds and undervalued stocks reduces risk while maintaining growth potential
• The FOMO Trap: Fear of missing out drives investors to buy at market peaks—the exact opposite of prudent retirement planning
• Personalized Portfolio Analysis: Understanding your specific holdings, not just asset allocation percentages, prevents costly mistakes
• Team-Based Research: Access to multiple portfolio managers means diverse expertise on AI sector volatility, food industry compression, and real estate opportunities
• Faith and Finance: Building financial security on something larger than market returns creates peace of mind through volatility

Understanding Market Risk in 2025: What Pre-Retirees Need to Know

With the Dow and S&P 500 reaching record highs despite predictions of market meltdowns, many investors wonder whether to stay invested or move to safety. Mike Johnson explains the current market environment:

“Markets like to climb a wall of worry. You’ve had that since April when value abounded. You could almost throw a dart in April and buy something that was good. The market is up more than 25% since then. But what you’ve had is a shift from total risk-off to now risk-on across asset classes, and it gives us pause.”

This transition from cautious to euphoric investing signals danger for retirement portfolios. As Hudson Kemp notes, the “me too money” piling into markets at peak valuations creates vulnerability that retirees cannot afford.

The 8-8.5 Risk Scale: What It Means for Your Retirement

When asked to rate current market risk on a 1-10 scale, Mike Johnson placed it at 8-8.5- primarily due to elevated price-to-earnings ratios. This assessment drives Dupree Financial Group’s current strategy of profit-taking and repositioning into government bonds and undervalued dividend-paying stocks.

“When you’ve had a period of higher than average returns, you expect the future returns to be less. If you have a stock that was trading at 80 and it goes to 50, is it more or less risky at 50? Typically it’s less risky at 50. If you have a stock that goes from 50 to 80, it’s probably more risky at 80 because it’s priced for perfection.”

Active Portfolio Management vs. Quarterly Rebalancing: The Critical Difference

Hudson Kemp shares a revealing conversation with a friend whose financial advisor makes portfolio adjustments quarterly—a stark contrast to Dupree Financial Group’s daily monitoring approach:

“I have a friend who had a meeting with their advisor two days ago. I gave them some questions to ask, and one was: how often do you make adjustments in my portfolio? That advisor makes those adjustments on a quarterly basis. Compare that to what we’ve just discussed—active portfolio management where we are watching every move in the market and making moves when opportunities arise.”

This difference becomes critical during volatile periods. When