2026 is shaping up to be a challenging year, full of macro risks and urgency to manage risk. The financial radar shows both slow-moving hurricanes and sudden tornadoes in the market. Concentration in top stocks is high, inflation is at 3%, and GDP growth is modest at 2.2%.

To prepare for the storm, diversify away from top stocks. Consider shifting to a 40/60 U.S./international split. Be ready for sudden tail risks, like geopolitical flare-ups or tech market breaks. Using out-of-the-money puts as a convex hedge can protect your portfolio and prevent significant drawdowns.

Consider buying out-of-the-money puts for protection against potential market downturns. An example is a 15% OTM put on the S&P 500 ETF (SPY) with a year-end expiration. This type of hedge can help stop the bleeding if the market revisits previous lows. Planning for the storm means being solvent when the sun comes back out.

Read more at Barchart: How To Manage Risk and Weather Financial Turbulence in 2026