Managing Emotions Late in the Cycle
Mortgage rates are creeping up again, and California gas prices are over $6 per gallon. Meanwhile, 85% of S&P 500 companies are reporting better-than-expected earnings and major US stock indices post new all-time highs after one of the most improbable V-shaped recoveries in market history. A reality check feels overdue.
With momentum abating, investors are in one of the toughest positions they’ve experienced in years. How long can the economy be propped up by affluent household spending and a government-supported AI infrastructure boom before a reckoning materializes? The 30,000-foot-view tells us we are in the backend of a 16-year-old secular bull market that started in 2009, post-Great Recession. You can cite the Farmer’s Almanac, thermodynamics, or whatever you like, but markets inevitably reach some elaborate denouement that resets the system.
In a powerful bull market, it usually takes about 15 years and a few 20% pullbacks to fully desensitize the average investor to the painful lessons learned in the last bear market. A real bear market. We’re talking 2002, the Nasdaq just hit rock bottom, unwinding 78% of its peak value in a crushing two-and-half year selloff. The investment team remains proactive, and we believe this environment will reward disciplined, patient investing above all else.
Countdown to SpaceX Joining the Nasdaq
Going Public in a Moonshot AI Economy
New capital is being raised at historic levels this year. The biggest name paraded by Wall Street is SpaceX, a company recently valued at $1.77 trillion (notably higher than its December 2025 valuation at $800 billion). No need for alarm, but the company is only expected to generate $25 billion in revenues this year. It seems the prospect of a colony on the moon is too irresistible. When it went public on June 12, SpaceX became the largest public debut in history (surpassing Saudi Aramco’s listing in 2019).
The next two ‘unicorn’ IPOs (initial public offerings) hotly anticipated this year are the AI software companies, Anthropic and OpenAI. Estimates have them raking in about $1 trillion each. Apart from the iconic debuts, lPOs are actually slowing down compared to prior years. Dealmakers attribute the slump to macroeconomic volatility and a cooling off in the tech and software.
Dear Soft Landing, Sorry for Persistent Inflation
The Iran conflict disrupted up to 20% of global daily oil supply with the closure of the Strait of Hormuz. The effects hit consumers immediately with gas prices topping $4 per gallon for the first time in years. Headline inflation hit 3.8% after a worry-free February print of 2.4%. The shift in expectations has pushed 30-year treasury yields above 5%—a level not sustained since 2007.
Unlike tariff-driven inflation, which trickles through supply chains over months, energy price shocks are felt almost overnight. The stock rally largely shrugged off warnings of an impending shortfall in what could prove a gross miscalculation for those blindly following the herd. We will continue to carefully manage risk exposures in our active strategies as financial markets confront the true weight of these disruptions.
Staying Disciplined
One can hardly separate the good news from the bad amid the onslaught of headlines. The worst part is how counterintuitive the markets seem to react. It’s precisely why our approach is designed to serve you well. Rules based on PRICE TRENDS guide our decisions, not predictions. The FSA Safety Nets® were designed to let portfolios participate in rising markets while setting a floor against catastrophic downside risks.
We do not need to be right about when inflation peaks or what the Fed decides in July. We need to stay positioned, stay disciplined, and be ready to act when trends shift. The second half of 2026 will undoubtedly be eventful. Our team will be monitoring the situation closely, and we are grateful for the trust you place in us to do so.
Please contact your advisor to discuss any changes regarding your investment objectives and how we manage your money — Thank you.
Jordan Daugherty CFA, CMT
Senior Investment Analyst
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