The first few months of 2026 didn’t unfold the way many expected. Markets tend to like predictability, but in reality, surprises are common. Periods like this are a good reminder of an important principle: stick with a well-thought-out financial plan, especially when things feel uncertain.
Early in the year, investors were focused mainly on the economy and whether certain areas—especially companies tied to artificial intelligence (AI)—had become too expensive. At the same time, several global issues were developing in the background but weren’t getting much attention. During this period, we began to see a shift in the market. Large, well-known companies—particularly in technology—came under pressure, while smaller and more reasonably priced companies performed better. This is a normal part of market cycles. In fact, smaller company stocks gained modestly while large company stocks declined during the quarter.
The overall economy remained relatively stable. People are still spending, and businesses are holding up. However, inflation (rising prices) is still higher than the Federal Reserve would like, and the job market, while steady, has slowed somewhat.
As the quarter progressed, global tensions increased—particularly involving Iran—and this began to weigh more heavily on markets. Oil prices rose, which added to inflation concerns and pushed interest rates higher. As a result, the S&P 500 declined by roughly 4–5% for the quarter. Looking ahead, if these geopolitical tensions ease, markets could recover just as quickly as they declined. Lower energy prices and fewer supply disruptions would help reduce inflation and improve investor confidence.
Meanwhile, the long-term impact of AI is still unfolding. Like any major technological shift, there will be winners and losers—but it takes time to sort that out. Some companies may benefit greatly, while others may face challenges. We are also seeing some ripple effects in areas like private credit (loans made outside traditional banks), where investors are being reminded that these investments are not easily sold and require patience.
With so many moving parts, it’s natural for headlines to feel unsettling. But market ups and downs are nothing new. History has shown that reacting emotionally during volatile periods often does more harm than good.
For long-term investors, the fundamentals remain solid. Bonds continue to provide income, and stocks have consistently recovered from temporary declines over time. A diversified portfolio—designed to meet your income needs while allowing for growth—helps navigate environments like this. For now, the best course of action is to remain patient and disciplined. Your financial plan—not the latest headlines—should guide your decisions.
