What are some potential warning signs of an upcoming market crash, and are any present today?
If there was a crystal clear indicator of a market decline, no one would ever lose money. Unfortunately, market crashes only become fully apparent when they're already in progress. The crash itself can be thought of as a critical mass of investors simultaneously trying to avoid it.
There are, however, some signs of market fragility and elevated risk. Stock market valuations have sustained much higher valuations than the historical average. This does not mean a crash is imminent. Indeed, the market can survive many years in a state of overvaluation. Rather, today's valuation highlights the risk of a downturn. An overvalued market has much further to fall before finding support. If the market doesn't decline to a fairly level, there is another way out: inflation. Eventually, the market's valuation will better reflect the numbers underlying business conditions, one way or another.
How can retirees/soon-to-be retirees prepare for 2026 to improve their portfolio returns & protect their nest egg?
By definition, passive index investors cannot avoid a decline. Their strategy is to hold through volatility so as not to miss out on any gains. However, this may not be viable for retirees or other investors needing short-term liquidity. Broadly speaking, there are only two ways to avoid a market decline: timing the market, or selecting more resilient holdings. Successfully timing the market is extremely difficult even for professionals, and I never recommend clients to attempt this themselves. The other option is to select investments thoughtfully and with an eye on their fundamentals and valuation. A portfolio of 20-30 quality stocks can outperform indices whether the market is going up or down. A professional investment advisor can assist clients to construct such a portfolio.