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Q1 2026 – Keynote Newsletter

Mon, 06 Apr 2026 18:20:40 GMT

“Stay humble or the market will do it for you." - Anonymous

As we move further into 2026, the global landscape continues to be shaped by ongoing geopolitical uncertainty and shifting economic dynamics. Tensions across key regions, evolving trade relationships, and persistent policy divergence among major central banks have contributed to a more complex backdrop for investors. In addition, the upcoming midterm elections introduce another layer of uncertainty, as potential shifts in the political landscape could influence fiscal policy, regulatory priorities, and overall investor sentiment. We are also increasingly mindful of the growing federal deficit, which over time may place upward pressure on interest rates, crowd out private investment, and limit policymakers’ flexibility in responding to future economic downturns. While these developments have not derailed global growth, they have increased market sensitivity to headlines and reinforced the importance of maintaining a disciplined, long-term investment approach.

Equity markets have shown resilience despite these uncertainties, supported in part by stable corporate earnings and expectations for moderating monetary policy. However, valuations in several segments of the market are becoming increasingly stretched, particularly in areas that have led recent gains. As the election cycle progresses, markets may begin to price in different policy outcomes, which could lead to periods of volatility or sector rotation. In this environment, we believe it is important to remain selective and valuation-conscious. Our focus continues to be on identifying opportunities where fundamentals remain strong but pricing does not fully reflect long-term value.

At the same time, elevated oil prices have added another layer of complexity, contributing to inflationary pressures and influencing both consumer behavior and corporate costs. While high energy prices can weigh on certain sectors in the short term, they may also present opportunities as markets adjust. Should oil prices moderate in the coming months, it could provide a supportive tailwind for broader economic activity and risk assets. As always, we remain vigilant in monitoring these developments (including geopolitical risks, fiscal conditions, and the evolving political backdrop) and are committed to positioning client portfolios to capture value while managing risk.

State of The Market

Q4 2025 – Keynote Newsletter

Tue, 06 Jan 2026 18:16:46 GMT

“Do not save what is left after spending; instead spend what is left after savings" - Warren Buffett

Once again, we find ourselves entering a new year after consecutive positive years in the market. Despite the tariff scare in early April 2025, the markets have held up surprisingly well. While we still believe the markets are fundamentally overpriced, there has been significant momentum, particularly in the area and the newness of the artificial intelligence space. Massive spending on AI infrastructure is expected to continue driving growth, with some expecting a shift from hype to proven returns. While some may debate this, a strong U.S. economy with healthy corporate balance sheets and ample liquidity provides a solid base for profits. A softening labor market could encourage the Federal Reserve to cut rates again making borrowing cheaper and supporting stocks. As mentioned in the past, we believe the broader market’s health, beyond just mega-cap stocks will widen out.

On the flip side, the market enters 2026 with high valuations, increasing the risk of pullbacks and volatility, even if a crash isn’t expected. Currently, the labor market is softening, and that does indicate a weakening economy. There is always a fine balance between when the Fed lowers interest rates because of economic concerns and the positive effect that lowered rates can have. Political uncertainty with mid-term elections will create risk as will the continued tensions arising from the trade and tariff issues. Persistent inflation will most likely continue to squeeze consumers and could limit Fed rate cuts. Finally, the massive capital flowing into AI needs to translate into productivity gains, which is not a guarantee. Being selective in the AI space has led to a positive outcome and harvesting some of these gains is paramount. Investing those gains into overlooked and undervalued areas will help us diversify as the market’s breath widens.

As the Warren Buffett quote implies, you should pay yourself first by saving before spending. If you don’t save, you might overspend. If you save first, you are “forced” to live within your budget and avoid impulse buying. As we approach 2026, let us be cognizant of where we are within each of our financial “pictures” so as to prepare for the future whatever that may look like. We wish everyone a happy and heathy new year.

State of The Market

Q3 2025 – Keynote Newsletter

Tue, 14 Oct 2025 13:19:49 GMT

“The one investing certainty is that we are all frequently wrong.” – Bill Gross

Since the beginning of the 2nd quarter when President Trump announced his global tariffs, how many of us would have thought the stock market would be where it is today? Probably very few of us. This highlights the unpredictability of investing and the importance of humility. As the predictions of tariffs causing the markets to implode has seemingly come and gone, it is an important reminder to all of us that we need a resilient and disciplined investment strategy. Exiting the markets in early April would have been a fool’s errand. The idea that humility is essential to success in the market can be evident in Howard Marks writings that “what’s clear to the broad consensus of investors is almost always wrong” because a widely held, positive view often means the investment is overpriced.

Our consistent view has been that there are pockets within the market that are, in fact, fundamentally overpriced. Oftentimes, those securities have significant momentum behind them for various reasons. The behavioral factors driving that momentum are the current investor psychology and market dynamics. Particularly, the advent of artificial intelligence (AI) has created an investment craze that we view as similar to the “dot.com” bubble back around the year 2000. While we hold securities that we believe will benefit from the buildout and usage of artificial intelligence, it is almost impossible to know which ones will have lasting value. AI technology is still in its infancy so discerning and identifying which companies will be able to monetize the usage of AI will be our goal. It is imperative for us to monitor those securities and to take profits in due time to keep a healthy balance in client portfolios.

Being overconfident in this market will at some point hurt investors. The question is when. The market is currently expensive by many metrics, with the S&P 500’s price-to-earnings (P/E) ratio around 23. The late 1990’s tech bubble and the post-Covid period are similar to where we are now. This may suggest lower future returns once the momentum dissipates. As we have mentioned in the past, we will continue to take profits on the “expensive” stocks and shift to those with more attractive valuations that should participate as the market’s breadth widens out.

State of The Market

Q2 2025 – Keynote Newsletter

Mon, 07 Jul 2025 14:47:16 GMT

“Investing without research is like playing poker and never looking at the cards.” – Peter Lynch

What a difference one quarter can make. As we look back, in early April the market was in complete panic primarily driven by President Trump’s escalating trade war with China, specifically his announcement of new and expanded tariffs. This created significant uncertainty and fear among investors, leading to sharp sell-offs. Since then the market has staged a remarkable recovery in part because the President put a 90-day suspension on those additional tariffs back on April 9th. As of today, the July 9th deadline for potential tariffs seems to have been pushed back to August 1st, but the ongoing uncertainty surrounding trade deals and tariff rates is unsettling the market. Despite this, the economic data, including jobs, corporate earnings, and inflation, has generally remained strong, supporting market confidence despite some warnings of potential headwinds.

Market breadth is generally considered to be expanding, particularly in the context of the current stock market rally. This means more stocks are participating in the upward movement, rather than just a select few. Initially, the rally was heavily concentrated in the “Magnificent 7” tech stocks, but recently, other sectors like financials and industrials have joined the gains. As more sectors participate, it opens up opportunities for investors to find value and growth beyond the previously dominant tech stocks. This has been our mission for a few years now finding undervalued securities that have not been part of the rally, most of which have very good dividends. Their time will come as the market breadth continues to expand. We have been reallocating as we anticipate this widening will continue over time.

As a bull market matures, company research becomes increasingly important because broad-based gains give way to greater dispersion between winners and losers. Valuations often become stretched, making it crucial to separate fundamentally strong businesses from those driven by hype or momentum. As investor sentiment grows more euphoric, solid research helps anchor decisions in reality and manage portfolio valuations. In short, deeper into a bull market, selectivity and disciplined analysis become essential for portfolio risk management.

State of The Market

Q1 2025 – Keynote Newsletter

Tue, 08 Apr 2025 14:42:39 GMT

“Opportunity doesn’t come often, so seize it when it does. Opportunity meeting the prepared mind – that’s the game.” – Charles T. Munger

Since the beginning of the 2nd quarter, the markets have taken an abrupt turn to the downside. As we have alluded to in the past couple of years, the markets have gotten very expensive on a price to earnings basis (P/E ratio). Now, with President Trump deciding to wage tariffs on many countries across the world, it has unleashed a wave of uncertainty that even the most schooled money managers are having a difficult time navigating. Part of that is because the size of the tariffs took the market completely off guard. In our view, the tariffs were a catalyst for the market to begin adjusting those securities with very high earnings multiples. This was prevalent in the “tech” markets, particularly the “Magnificent 7” that we often hear about. Last Friday the Dow dropped 2,231 points or 5.5% in one day and most companies were not spared.

It will be very interesting to see how interest rate policy evolves in the near future as many believe that the President wants lower interest rates. This has made Jerome Powell’s job much more difficult as he will need to navigate pressure from the President to lower rates while adhering to the Federal Reserve’s dual mandate which requires it to pursue both maximum employment and stable prices in the US economy. Going too far in either direction with interest rates both have negative results. Lower rates could mean higher inflation and higher rates is worse for the economy and the stock market.

We believe that the market is going to take time to sort out the nuances of the tariff impact as it relates to corporate earnings. Particularly because the earnings impact will only show up in July with the 2nd quarter results. During this time, we view this as an opportunity to find the great stocks that were not spared in the recent selloff and pounce on the opportunity to add them to portfolios. The uncertainty of the markets will subside and those who execute during this adjustment period should be well rewarded in the long term.

State of the Market

Q4 2024 – Keynote Newsletter

Mon, 06 Jan 2025 14:33:46 GMT

“Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard.” – Warren Buffett

Similar to the end of 2023, we again find ourselves coming out of a surprising year in the market. With a change of leadership forthcoming, a slightly dovish Federal Reserve, status quo in Russia/Ukraine and the Israel conflict, and corporate profits that have held steady, we find ourselves pondering what 2025 holds for the markets. Currently, there is a debt ceiling issue and the unknowns of what a change of leadership will bring. President Elect Trump has a strong penchant for low interest rates as well as lower taxes but the country also has a big debt problem. While the new administration may want lower interest rates and lower tax rates, it remains to be seen if inflation, the Fed and/or Congress will ultimately dictate that course. We also have a market with a current Shiller Cyclically Adjusted PE Ratio of 37.74 (price earnings ratio which is based on average inflation-adjusted earnings from the previous 10 years). In layman’s terms, that means the current market is the 2nd most expensive we’ve ever seen (the ‘dotcom’ era is 1st ).

What does all this mean for markets? In our view, it means that we need to pay particular attention to what we pay for securities and which ones we buy. At some point, if history repeats itself (and it usually does), there will a reversion to a more normalized price earnings ratio. As we have mentioned in the past, chasing the popular stocks normally does not end well once the brakes are applied to the market’s momentum. To the extent that we may own stocks with higher valuations that have benefited from the momentum, it behooves us to occasionally take gains and reallocate to better valued securities for the long-term health of each client’s portfolio.

With many moving parts to come in the next 12 months, our key is to focus on companies with future earnings, which ultimately drive markets and dividend payouts. The effect of whatever direction inflation takes along with future government policies (ie. interest rate direction, taxes) going forward will help determine those earnings. In Buffett’s quote, the “playing field” is good prices, future earnings, disruptive companies, etc. which ultimately will lead to a long-term scoreboard that should not disappoint. Market volatility is merely noise.