MARKET RECAPS, FUTURE TRENDS AND QUARTERLY INSIGHTS

Rough Waters
Q4 2026 Market Outlook

“No one would have crossed the ocean if he could have gotten off the ship in the storm” – Charles Kettering

Bonds, not equities, might dominate the investment trajectory for Q4. As yields spike, one has to wonder: has the bill finally come due on our reckless spending? We have flagged the instability of the US Government’s finances in the last few quarterly updates, but now the whole world is taking notice. Rising yields could be an existential threat to equities and the current rally. Yields may force both the Treasury and the Fed to react, and the most common way to kill off a bull market is policy error. Move too slowly and inflation and yields could accelerate; move too fast and you could see a recession. The knife cuts both ways. Added to this mix is the large issuance of high-grade corporate bonds from companies like AMZN or GOOGL, which one could argue have much stronger balance sheets than the US government at this point. All this is putting significant pressure on the bond market.

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An Icarus Moment?
Q3 2026 Market Outlook

“Fly too low and the sea’s damp will clog your wings. Fly too high and the sun will melt the wax. Fly in the middle, my son.” – Daedalus to his son Icarus. Metamorphoses Book VIII

The second quarter felt like an eternity between war and mega IPOs. But in a mere 3 months we weathered inflation and commodity shocks, rapid market reversals, and rising, but ignored, risk. However, risky and stressful doesn’t mean it was a bad quarter. In fact, the last 3 months have been some of the strongest performance for technology stocks since the 1990’s. As usual, markets were very willing to overlook war, and even a direct conflict with Iran was not enough to erode investor confidence that the war would not expand, nor boots be put on the ground. While high oil prices have taken their toll on near-term inflation, once again markets took an optimistic position that inflation is transitory and once the Strait is opened, all will be well again. Investors are the consummate optimists, which as long as the bull market continues, is likely the right outlook.

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A War-Torn Market
Q2 2026 Market Outlook

“Fear has a greater grasp on human action than does the impressive weight of historical evidence.” – Jeremy Siegel

The war in Iran put a damper on any excitement about 2026 earnings and economic growth. A market that was already treading sideways in a narrow range ran into a major conflict and spiking energy prices, which are a concern to inflation, costs, and margins. While conflicts historically have a minimal lasting effect on the markets, a sustained oil price spike is the major concern, dragging down profit margins, hampering economic growth, and increasing inflation risks, all of which makes it hard for the Fed to cut rates. None of the strong earnings reports & continued expansion of AI and infrastructure buildouts mattered once war started in the Middle East. Fundamentals took a backseat to geopolitical risk and markets started trading almost exclusively on headlines and tweets. Value stocks (as we predicted) have held up relatively well, though cracks in financials dragged that sector down into one of the worst performing YTD. US markets lagged international and emerging markets, until the war hit, and then the US started strongly outperforming their international peers as the US is better insulated to energy shocks than Asia and Europe.

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Bull, Bear or Badger?
Q1 2026 Market Outlook

“Invincibility lies in the defense; the possibility of victory in the attack.” – Sun Tzu The Art of War

2026 is somehow feeling even more uncertain than 2025, which is a very high bar. It’s easy to forget the many monumental events that occurred this year including the DeepSeek AI scare in January, tariff rollout and subsequent market tantrum in April, wars, unrest, and a litany of events that make your head spin trying to recall them all. Our outlook for 2025 was titled “Piloting Through Noise” and somehow that underestimated the amount flak that would be thrown at the market. Our 2025 outlook had a year-end target of 7,100 on the S&P 500 (implying about a 15% return when we wrote it) and Fed Funds upper bound of 4.00%. This year will end with the S&P hovering around 6,800 (as of 12/15/25) and the Fed Funds upper bound at 3.75% – missed it by 1 cut and a tail off in the rally. Equity markets showcased their ability to ascend a growing wall of worry without breaking a sweat, as all those significant events and announcements did not derail the rally. A reminder that markets care much less about politics than we do personally.

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Ascending A Wall of Worry
Q4 2025 Market Outlook

“The voyage of the best ship is a zigzag line of a hundred tacks. See the line from a sufficient distance, and it straightens itself to the average tendency.” – Ralph Waldo Emerson, Self Reliance and Other Essays

Any rational human may look at the state of the economy along with the multitude of simmering geopolitical events and assume this means it’s time to bunker in and prepare for a recession, or worse. The world feels on the brink of falling apart at the seams- either another Middle Eastern crisis, or Russia going after NATO, or the USA ripping itself apart as rhetoric continues to enflame differences and makes coming together harder. While we are not minimizing multiple tragic and difficult circumstances both at home and abroad, the market does not care. The stock market is cold and calculating, unencumbered by fear and doubt, powered ever higher by data, earnings growth, capex, new technologies and expanding profit margins. The litany of what-ifs and all that can go wrong is a long list, and there is always a reason to doubt the markets, just make sure you check your emotions and base your decisions on facts and not fear of what could happen. Our emotions are often the largest blockade to a successful investment strategy, and it is hard to stay the course when bombarded by bad news. However, we feel if you peel back the talking points and take a look at the data and drivers of this bull market- there is a lot to like.

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The Only Easy Day Was Yesterday
Q3 2025 Market Outlook

“But I’m not crazy, I’m just a little unwell/ I know right now you can’t tell/ But stay a while and maybe then you’ll see/ A different side of me./ I’m not crazy, I’m just a little impaired/ I know right now you don’t care/ But soon enough you’re gonna think of me/ And how I used to be.” – Matchbox 20, Unwell

Q2 has been Dickens-esque – the best of times and the worst of times – all in the span of 90 days. While the net overall movement in most markets has been benign, it hides the vast amount of volatility and angst suffered during this quarter.  A blink-and-you-missed-it bear market (on an intra-day basis) as well as continued shifting of policy sands has transformed 2025 from a comfortable bull market to navigating a mine field. We remain cautiously bullish, but wary of knee jerk reactions to policy announcements. Buried beneath the tweets are corporations still growing earnings and it’s hard to have a full recession while corporate profits are still growing.

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Rapid Recalibration
Q2 2025 Market Outlook

“Even the finest sword plunged into salt water will eventually rust.”- Sun Tzu

We entered the year cautiously bullish and flagged a policy error as a big potential risk to derail the market bull run – and boy, did that play out in Q1. While tax cuts, spending, or any sense of what the budget will look like is stuck in Congress, the market has been subjected to a large-scale game of chicken over tariff and trade which has raised the anxiety level significantly. Potential shifting alliances may pivot the US away from Europe and more towards Asia and Russia which could disrupt trade further if Europe pivots away from US trade in retaliation. The quick market sentiment change has caused the Magnificent 7 to pull an Icarus, flying too high and falling sharply down to earth. As we are preparing to enter Q2, all we can advise is to be comfortable being uncomfortable this year.

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Piloting Through Noise
Q1 2025 Market Update

“Fighter pilots have ice in their veins. They don’t have emotions. They think, anticipate. They know that fear and other concerns cloud your mind from what’s going on and what you should be involved in.’”- Buzz Aldrin

As we wrap up another year of excellent returns, investor angst continued to rise even as markets powered higher, with the S&P 500 logging back-to-back 20%+ returns for the first time since 1997-1998. With 58 new highs reached in 2024, there remains investor anxiety about the sustainability of the rally. One must be thinking of Icarus and flying too high and too close to the sun, but we caution that this is still a normal bull and has plenty of gas to run higher. Bull markets do not typically end due to high valuations or old age, and while this one will eventually end, we feel it might still be 18-24 months before it begins to roll over. BUT, and for the first time we are adding the qualifier, there are certainly risks of a policy error in 2025, either fiscal or monetary, which is a tried-and-true way to kill off a bull market. So, we remain bullish, and our base case is the rally continues, however we would be remiss not to be ready for lurking risks. The key is to remain focused on what matters in the face of increasing noise.

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Bracing For Turbulence
Q4 2024 Market Update

“An election is coming. Universal peace is declared, and the foxes have a sincere interest in prolonging the lives of the poultry.”- George Eliot

Q3 is always a rocky one and it lived up to its name by producing more volatility than we have seen all year. As we turn the page to the final quarter of the year, questions abound about if the market can keep up the bull run or if it’s been fatally wounded by a slowing economy and weakening labor market. The looming elections are causing anxiety levels to reach full panic mode for many investors; however, we temper that fear as elections matter much less to markets than they do to us personally. We argue the bull market is still alive and well, and we survived the weakest quarter of the year setting up for a year-end rally post-election.

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“Look at market fluctuations as your friend rather than your enemy. Profit from folly rather than participate in it.”- Warren Buffett

There is a wise adage, if you hear hoofbeats think horses not zebras. Meaning, consider common explanations rather than search for highly improbable ones. All signals point towards the bull market continuing, but we are stuck in an unfortunate period where it feels terrible to be a human existing in the United States right now. It can be hard for investors to see the positives that are driving the rally, and we find many people still extremely skeptical of the bull market or waiting for the other shoe to drop. As we hit the halfway point in the year it has been a solid, but unequal rally. To steal from Jay-Z, I’ve got 99 problems, but the market’s not one. We are also about to hit the apex of a hotly contested presidential election and the noise level is going to rise from a dull roar to earsplitting. Each candidate promising if you elect them, it’s all rainbows and puppy dogs, but if you don’t, we face economic ruin.

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