State of the Markets Q1 2026

VIDEO LINK: https://vimeo.com/1171056183?share=copy&fl=sv&fe=ci

VIDEO SUMMARY:

The market headlines can feel loud right now, but the data tells a steadier story. After back-to-back years of 20%+ gains, history shows the average following year still delivers a positive return — around 9.6%. All-time highs aren't a warning sign either; since 1950, returns after hitting new highs have actually been slightly better than on any other day. Meanwhile, the broader market is quietly doing its job — the S&P 493 is up nearly 4% year-to-date, even as the Magnificent 7 have pulled back. Diversification is working exactly the way it's supposed to.

What doesn't work? Trying to time the market around politics or headlines. A dollar invested across all presidents since 1950 grew to $417 — versus $46 under Democrats only or $9 under Republicans only. Geopolitical shocks have historically resolved into positive 12-month returns, averaging over 14%. And the longer you stay invested, the better the odds: every single 20-year rolling period since 1950 has been positive. Volatility is part of the deal — the average intra-year drawdown is -14% even in strong years — but the investors who come out ahead are the ones who don't confuse turbulence for a reason to get out.

VIDEO TRANSCRIPT:

Good morning. Welcome to the Money Matters. The week ending February 27th, 2026. February is behind us. That went fast. The state of the Union was Tuesday.

Uh, so I thought it might be appropriate to give you a little state of the markets. So we're gonna walk through this

and no matter where you align politically, hope you'll watch it. I think, uh, it'll, it'll be refreshing at least,

or not so much. So, um, I'm gonna kind of weave in here some comments and questions and concerns that, that we get.

Um, so one of them is, you know, okay, we've had three years in a row of growth. We're at, at or near all time highs.

Should I continue to invest? Right? Does this make sense? Should we, should we be, you know, expecting this big crash?

Um, the light blue is the average 1, 3, 5 year return of the s and p going forward since 1950.

Okay? So very, very great good returns. The dark blue is if you invested in the s and p at the all time high.

So, so you actually made a little more money on a one year, three year, five year forward return investing at the all time high.

So, yes, it's the all time high. It, it's higher up the tree further to fall, but history would suggest that,

and it's been proven, you know, highs tend to lead to new highs. Uh, every single time the s and p eventually reaches a new all time high.

It may not be right away, but just because we're at an all time high or near an all time high doesn't mean it's

time to run for the hills. Um, little bit of a change in what's leading markets here to date. This is through the 25th. Um, and this I think is important.

This isn't really a good or a bad thing, it's just a case for diversification.

What you see here is the S&P 500 is up about, we'll call it a point and a half for the year. Um, the s

and p 500 minus the seven biggest stocks is up 3.88%. And the seven biggest stocks are down collectively 2.51%.

So it, it shows you some of the impact they have on the overall, um, performance of the markets. I mean, they're very, very heavy weighted,

and some people would argue it's, it's too weighted in those magnificent seven. Um, but you can still see the diversification works

and it's, it's bucking that trend. Now, this one i, I really like because it points out what bologna advisors like me tell you,

and it's not bologna, but all the games you can play with, with numbers and averages. So if we were to say, for example, hey, we would, we would,

you know, long term s and p is eight to 10%. Uh, and so you would say, oh, well probably you're in eight to 10% every year.

No, you won't. Um, in fact, this Is, is from five to 10% and, and going back to 1950, so about 75 years of data,

it's only done that six times. Now on the left of the chart, those are all the years. It did better than that.

The majority of the time, quite a bit better, a few times between zero and, you know, four and a half,

and then when it did worse. But for the most part, you're either gonna make more or less, right? And, and I don't think anyone's surprised by

it's only done that six times. Now on the left of the chart, those are all the years. It did better than that.

The majority of the time, quite a bit better, a few times between zero and, you know, four and a half,

and then when it did worse. But for the most part, you're either gonna make more or less, right? And, and I don't think anyone's surprised by

that when you think about it, but just remember, average is average. There's always gonna be better and there's gonna be worse.

And a lot of times that's gonna happen within the year. We're gonna talk about that in a minute. Uh, again, politics.

I don't get too much into politics because, and some people may not like this, you know, you can't really control it.

And for the most part, it's a non-issue. And what I mean by that is we're always going to recommend investing.

We're always going to recommend staying the course within strategy, right? We do have buffers and protections, but look, this is the s

and p 500 under Democrats and Republicans can, can, you know, if you didn't have the chart, could you tell which one's which?

And, and I'll, and I'll save you the guessing because the return long term is almost the same. It's within a percentage point, okay?

So whether your people or person is in or not, it doesn't mean you just run for the hills when they're not.

In fact, if you do, um, if you invested under all presidents, this is a dollar invested in 1950, grew to $417.

If you only invested in democratic presidents, you made $46 or you got 46. If you only invested in Republican

presidents, you got to $9. Now, that doesn't necessarily mean democratic presidents outperformed Republican presidents. Um, there were more of them.

But it's just to say, you know, just because maybe it's not your person that's, that's in the office, it doesn't make sense

to sit on the sidelines. Uh, another big concern, or I should say question we get lately, okay, we've had two years now three years

of really, really good returns. Can, can we, can it continue? Well, historically, after that, the average is 9.6%. Uh, we just finished 2025 after two great years, and s

and p was up 16.39. It was only when we had the, the great recession back in the thirties that it had a negative.

So again, just because the market's up doesn't mean it's gonna turn around tomorrow. And then we get into the odds of making money over time.

And this is, you know, this should be shown in every meeting, anytime you're looking at your investments and it, and it is the difference between time

and timing the market, and it's been beaten to death, but it can't. So rolling five year period holdings, we're gonna skip the first three or four

because if you're investing in the market, you should have a time horizon of, of, well, longer than six months, and it should be longer than a year.

But even at a year, you're gonna make money. 74% of the time going back to 1950, the s and p is up positive return. 74%

Of the, the time you go five years, you're 84%. We have not personally had anyone lose money over a five year period.

I'm sure it's happened. I've been doing this since 2002, but we haven't had it happen 10 years. And that's pretty much the gold standard. Um, and 20 years.

Now, here's my question. Whether you're 30, 40, 50, 60, maybe even 70, if you look at your portfolio and you consider yourself

and your heirs, for a lot of people there is a 20 year, I think the vast majority, there's still a 20 year time horizon.

Your time horizon doesn't stop just because you're going to retire. You may want to be a little more conservative,

a little less, um, inequities. But if, if you hold the money or your family holds the money long term,

and that is a trend that you know has never broken and will never break, because it has to do

with overall markets. And if it does break, we've got a lot better problems. Now, that being said, again, back to

what happens in the short term, an average down year is around 12%. Some are worse, some are better. If you hold 40% bonds, you're not gonna see

as much in most years on and up year, you know, 17.7, that's a lot better than eight to 10.

But again, we're talking about averages. The distribution, again, we talked about this, most of the time it's going to be very good.

Over 10%, very few times it's going to be very bad. This one, uh, I like, uh, look, what, what if we go to war with Iran?

Are we going to war with Iran? I don't know. I, I hope it's a peaceful resolution. Um, but you can see a number of events here

that have happened in the past that at the time were very unique, um, not encountered them before. We didn't know what was gonna happen.

And this is the s and p one year return. After all those average 14.2%, um, pretty much everything other than nine 11 in the Ukraine one

year looking forward was positive. Nine 11 did fall into, you know, the great recession we called it, or the great reset,

and that took a few years, uh, at least. But all these other major events, they were unheard of at the time and we tended to move forward.

Okay? Uh, last piece and, and probably one of the, the key ones, just because you have a down month

or a down quarter, it doesn't mean anything for the year. And, and I think again, when people think about, okay,

well average we're gonna have a good year, it means we've gotta start out good means, you know, to make, I don't know, uh, what eight, 10%,

I should average about 2% a quarter. So let's see if I'm on track. Well, if you look at all these years

With, with this is the average return for that year or this is the actual return for that year, look at the inner year low.

So 2020, there was COVID, we were down 34% at one point. That was about the end of March. Uh, we finished the year up 16% based on the s and p.

Um, how about the last few years? You know, down 10%, down 8% last year, end of Q1, we were down about 20%.

Remember that still finished the year up 16%. So you can't judge the market or the year in, in a month, in a quarter.

Um, you have to look at it from the long term and, and control what you can control. So what can you control investing, staying invested,

being disciplined, and not letting the emotions cause you to make rash decisions. So with that, we're here for you,

your family, and your friends. Please reach out with any questions. Thanks for watching. Have a great day.