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Updated February 2026:DunhamDC is a systematic investment overlay that adjusts equity exposure in response to market movement, seeking to buy during periods of fear and reduce equity exposure during periods of greed. Built for independent financial advisors, DunhamDC uses the Dykmans Curve to apply a rules-based process rather than relying on emotion or market-timing judgments. The strategy is designed to help advisors manage behavioral risk, portfolio drawdowns, sequence-of-returns risk, and recovery periods across changing market conditions.
Key Takeaways
DunhamDC is an unemotional investment overlay and algorithm designed to buy during fear and sell during periods of market greed.
Inspired by Warren Buffett, Benjamin Graham, and the concept of “Mr. Market,” DunhamDC seeks to exploit emotional market extremes.
As markets rise, DunhamDC systematically reduces equity exposure; during declines, it increases exposure.
This disciplined approach aims to help mitigate sequence risk and potentially shorten recovery times after market downturns.
DunhamDC applies systematic portfolio adjustments rather than human judgment, helping advisors stay disciplined during volatile markets.
What Is DunhamDC?
DunhamDC is a systematic investment overlay that adjusts a portfolio’s equity exposure in response to market movement.
Its guiding principle is simple: buy fear and sell greed.
When markets decline and investor fear rises, DunhamDC is designed to increase equity exposure. When markets advance and optimism becomes widespread, it is designed to reduce equity exposure.
The goal is to apply a repeatable process through market cycles instead of asking advisors or clients to make difficult allocation decisions during stressful moments.
How Does DunhamDC Buy Fear and Sell Greed?
At its core, DunhamDC is not just another investment strategy; it is a philosophy - one that draws inspiration from the timeless wisdom of two of the greatest minds in investing: Warren Buffett and Benjamin Graham.
Known as the "Oracle of Omaha," Warren Buffett is revered for his sage advice and incredible success in the world of finance.
And Buffett's wisdom was influenced by the insights of Benjamin Graham – who is regarded as the "father of value investing."
Graham illustrated the emotional unpredictability of the stock market through the character of “Mr. Market”.
During market declines, fear dominates headlines and emotions, making it extremely difficult for investors to add risk. Conversely, during strong rallies, greed and fear of missing out (FOMO) make it hard to reduce exposure.
This is precisely where most investors—and many strategies—fail.
DunhamDC removes emotion from the equation.
By leveraging the Dykmans Curve - the “DC” in DunhamDC, named after its creator Ryan J. Dykmans, CFA, CIO of Dunham—the strategy systematically adjusts exposure based on market movements rather than sentiment.
Why a Rules-Based Investment Overlay Can Help Manage Behavioral Risk
Reduce Concentration Risk: Diverse portfolio options reduce concentration risk.
Whether it's buying fear during market downturns or selling greed during periods of exuberance, DunhamDCstays steadfast in its commitment to unemotional and disciplined investing principles.
In short, this means holding less risk near market peaks and more risk near market bottoms - the opposite of how most investors behave.
How DunhamDC Adjusts During Rising and Falling Markets
DunhamDC is designed to make systematic adjustments, rather than one large all-in or all-out allocation call.
Market condition
DunhamDC’s intended response
Market prices decline
Seeks to increase equity exposure over time
Market prices rise
Seeks to reduce equity exposure over time
Investor fear rises
Applies its rules-based process rather than emotional judgment
Investor optimism rises
Seeks to avoid adding risk solely because markets have been advancing
For example, when markets rise sharply, DunhamDC may reduce equity exposure and increase fixed-income exposure. When markets decline, the strategy may increase equity exposure at lower market levels.
The objective isn'tt to call exact market tops or bottoms - but rather to follow a disciplined allocation process across changing market conditions while taking advantage of Mr Market's mood swings (buying fear and selling greed).
Greater market volatility and global interconnectedness, allowing shocks to spread rapidly
Widespread behavioral biases, which undermine rational decision-making
Individually, these factors pose challenges. Together, they create a perfect storm.
This is where DunhamDC serves as a powerful overlay for financial advisors, helping protect clients from emotionally driven mistakes while navigating volatile market cycles.
Learn More About DunhamDC
We believe DunhamDC represents a disciplined, behaviorally aware approach to investing—one that challenges conventional buy-and-hold assumptions.
By blending timeless investing wisdom with systematic execution, DunhamDC seeks to help investors and advisors navigate markets with greater confidence and rationality.
To learn more about DunhamDC portfolios and allocations, visit our DunhamDC page or contact us at (858) 964-0500.
Frequently Asked Questions About DunhamDC
What is DunhamDC? DunhamDC is a systematic investment overlay that adjusts a portfolio's equity exposure as markets move. It's designed to increase equity exposure during periods of market fear and reduce it during periods of market greed. The strategy runs on the Dykmans Curve, a rules-based process created by Dunham President and Chief Investment Officer Ryan Dykmans, CFA.
How does DunhamDC buy fear and sell greed? DunhamDC reacts to market movement with built-in portfolio adjustments. When markets drop, it's designed to add equity exposure at lower prices. When markets climb, it's designed to trim exposure back. The idea is to counter the natural urge to sell after a decline and chase gains after a rally, which is often what hurts investors most.
Is DunhamDC a market-timing strategy? No, DunhamDC is a rules-based overlay, not a discretionary bet on where markets go next. It follows predetermined adjustment rules tied to market movement rather than guesswork. The goal is managing exposure through full market cycles instead of relying on an advisor or investor to make the right emotional call at the worst possible moment.
How can an investment overlay help financial advisors manage sequence risk? An overlay like DunhamDC helps manage sequence-of-returns risk by adjusting exposure as markets move through cycles. Early losses hit harder when retirees are also pulling withdrawals. DunhamDC aims to reduce exposure after extended gains and add it back after declines, though no strategy can remove investment risk entirely or promise a specific outcome.
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
Past performance may not be indicative of future results. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. There may be economic times where all investments are unfavorable and depreciate in value.
DunhamDC (“DunhamDC”) is a proprietary algorithm of Dunham & Associates Investment Counsel, Inc. (“Dunham”) that seeks to mitigate sequence risk, which poses a threat to an investor's returns due to the timing of withdrawals. The algorithm employs what Dunham considers to be a pragmatic strategy, generally making incremental increases to the equity allocation when global stock market prices decrease and decreasing it when global stock prices increase. This approach is objective, unemotional, and systematic. Rebalancing is initiated based on the investment criteria set forth in the investors application and is further influenced by the DunhamDC algorithm.
Due to the large deviation in equity to fixed income ratio at any given time, investor participating in DunhamDC understands that a large deviation in equity to fixed income ratio can have significant implications for the risk and return profile of the account. Accordingly, during periods of strong market growth the account may underperform accounts that do not have the DunhamDC feature. Conversely, during periods of strong market declines, the account may also be underperforming, as the account continues to decline, due to the higher exposure in equities. Similarly, if the fixed income investments underperform the equity investments, it is possible that the accounts using the DunhamDC feature may underperform accounts that do not have the DunhamDC feature, even though they may have adjusted the exposure to equity investment before a decline. Therefore, the investor must be willing to accept the highest risk tolerance and investment objective the account can range for the selected strategy. Please see the Account Application for the various ranges.
DunhamDC uses an unemotional, objective, systematic approach. The algorithm does not use complex formulas and is designed to create a consistent process with limited assumptions based on historical data.
DunhamDC may make frequent purchases and redemptions at times which may result in a taxable event in the account and may cause undesired tax-related consequences.
Trade signals for DunhamDC are received at the end of each trading day with the implementation of the trades not occurring until the next business day, which means that there is a one-day lag that may result in adverse prices.
DunhamDC operates within predefined parameters and rules, some or all of which may not be available to review. While this approach can reduce emotional biases and enhance consistency, it may limit adaptability to changing market conditions, economic considerations, or unforeseen events. Extreme conditions may require deviations from the program’s prescribed approach, and such adaptability may be challenging to incorporate. The DunhamDC algorithm is programmed based on specific criteria and rules, it may not capture certain qualitative or contextual factors that can impact investment decisions or movement in the markets. Beyond the initial assumptions used to develop the algorithm, it lacks other inputs or considerations that human judgement and discretion may be necessary to evaluate. DunhamDC may utilize historical data, statistical analysis, and predefined rules. It does not make any predictions and may add to certain investments before they perform poorly or may divest from other investments before they perform well. Dunham makes no predictions, representations, or warranties as to the future performance of any account.
Accounts invested in DunhamDC are subject to a quarterly rebalance to its target allocation at the time based on DunhamDC in addition to the signals provided by DunhamDC at any given time.
Dunham makes no representation that the program will meet its intended objective. Market conditions and factors that influence investment outcomes are subject to change, and no program can fully account for all variables and events. The program requires making investment decisions based on factors and conditions that are beyond the Account Owner’s and Dunham’s control.
DunhamDC is NOT A GUARANTEE against market loss or declines in the value of the account or a timing strategy. Investor may lose money.
Asset allocation models are subject to general market risk and risks related to economic conditions.
DunhamDC has a limited track record, with an inception date of November 30, 2022.
**The investment strategy of DunhamDC is powered by the DC algorithm, focusing on the principles of price and time. Utilizing multiple “zones” or trigger points, the algorithm systematically identifies market sentiment, selling into strength during periods of euphoria and greed, while capitalizing on opportunities duringtimes of pessimism and fear. This allows DunhamDC to adapt dynamically to changing market conditions.
DunhamDC is NOT A GUARANTEE against market loss or declines in the value of the account or a timing strategy. Investor may lose money. Asset allocation models are subject to general market risk and risks related to economic conditions. The chart represents the trade signals when the equity allocation increased (green arrows) or decreased (red arrows) over the period shown. See reverse for Important Disclosures.
1Market Growth represents the MSCI All Country World Index (ACWI).
The MSCI All Country World Index (ACWI) is a stock index designed to track broad global equity-market performance. Maintained by Morgan Stanley Capital International (MSCI), the index comprises the stocks of nearly 3,000 companies from 23 developed countries and 25 emerging markets.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.
