Goldman Sachs is warning investors to brace for a possible stock correction that won’t necessarily be buffered by bonds. While the markets started the year risk on, concerns about the spike in oil prices, Iran war and artificial-intelligence disruption have dragged equities down. The Dow Jones Industrial Average , S & P 500 and Nasdaq Composite are all in the red so far in 2026. That sell-off could deepen, Christian Mueller-Glissmann, head of Goldman’s asset allocation research, said in a note Thursday. “While geopolitical shocks and their market impact are difficult to time, we think equities have not priced in enough risk premium for the risk of a more lasting shock — based on the disruptions so far our economists have already reflected a worsening,” he wrote. In addition, the buffer from bonds, which traditionally have served as a ballast in portfolios, will be limited, he said. Therefore, “the risk of a larger 60/40 portfolio drawdown … has increased,” Mueller-Glissmann cautioned. Shifting portfolios Goldman has shifted more defensively in its asset allocation for the next three months and is overweight cash, underweight on credit and neutral on equities, bonds and commodities. For allocations over the next six months, it bumps up its risk to overweight equities and moves cash to neutral. The firm’s long-term world portfolio proxy , which spans global equities and bonds, as well as gold, has lost about 4% since the start of the Iran war — a “small drawdown in a long-run context,” Mueller-Glissmann said. However, while the risk of a sustained, large 60/40 loss is still limited, investors should consider mitigating continued stagflationary risks by beefing up their multi-asset portfolios, he said. “[W]e believe investors can look at a combination of up-in-quality trades in equity/credit/FX, allocations to alternatives, dynamic risk allocation, and option overlays in equities and across assets,” Mueller-Glissmann said. Since the start of the year, exposure to defensive, quality equities, allocations to commodity trading advisors (CTAs), gold and Treasury inflation-protected securities, as well as an options strategy of put spreads on the S & P 500 would have helped performances versus a 60/40 portfolio on a risk-neutral basis, he noted. “We continue to like those strategies to manage 60/40 drawdown risk into Q2,” he said.