Friends,
As you are well aware, the news is currently dominated by the war in Iran and the resulting spike in oil prices…. raising real concerns around the ultimate impact on global economies, inflation and interest rates. Thus far, financial markets have been remarkably resilient. Through March 31st, domestic stocks were only down 4% year to date, foreign stocks were down 1% and the bond market was essentially flat. Given that we entered 2026 after three consecutive years of double-digit stock market returns it feels like it could have been much worse. During the first quarter and even before the war, the domestic stock market had been rotating slightly away from large cap tech stocks toward more defensive sectors (Industrials, etc.). Fortunately, we anticipated this rotation and began shifting our portfolios during the fourth quarter of last year. For the most part, we believe a broadening out of the market is healthy for the market and for investors.
It’s impossible to predict exactly how events will unfold in the Middle East and what their impact will be on financial markets. We certainly anticipate continued high volatility related to the news cycle, political pronouncements and the daily change in the price of oil…and we understand that military conflict and uncertainty can create a great deal of tension for investors. Having said that, we believe that the domestic political environment and upcoming mid-term elections will practically force our political leaders to limit and ultimately de-escalate the conflict. In addition, U.S. stocks have historically rebounded well from major geopolitical events.
While the landscape may remain volatile in the short term, we are long-term investors. We are constructive but not complacent regarding markets and continue to believe that diversification and our disciplined strategy are still the most effective tools for navigating through times like this.
Let us know if you have any questions or if we can do anything for you. Thanks as always for your support and encouragement.
Matt and Andrew