The sun is coming, that I can assure you…

 

The first quarter of 2026 was a good reminder that markets don’t move in straight lines and that’s normal. We entered the year with cautious optimism, alongside a fair amount of uncertainty around interest rates, tariffs, and the broader economy. None of these were new concerns, but rather a continuation of the key themes that defined 2025.

 

What we didn’t foresee was the U.S. entering a new War in Iran, sending global energy markets into turmoil. While this has dominated headlines, it’s the knock-on effects that matter most. Higher oil prices can lead to stickier inflation, which in turn influences how central banks approach interest rate decisions in the months ahead making it more difficult for businesses to assess borrowing risks.

 

As questions persist around whether inflation is moving sustainably in the right direction, central banks are taking a measured approach. Rate cuts may still be on the horizon, but likely not as quickly or as aggressively as markets had expected at the end of last year.

 

All of this has created some short-term noise, particularly in equities.

 

Perhaps the most notable development, however, is how global markets have generally held up. This resilience has been supported by solid corporate earnings and the ability of businesses to adapt to a rapidly changing environment.

 

In times like these, the hardest thing to do is tune out the noise of the daily news cycle and stay focused on long-term investment goals.

Our approach remains unchanged. We continue to focus on owning high-quality businesses—those with strong balance sheets, ample cash reserves, and proven track records of navigating challenging environments.

 

While we understand it can be difficult to look past the headlines, nothing we’re seeing today warrants a change in strategy. If anything, this environment reinforces why we invest the way we do: building portfolios designed to participate in strong markets while helping to limit downside during more difficult periods.

 

We have entered a more volatile environment. That requires patience, discipline, and a continued focus on the long term. As we’ve said before, well-capitalized, well-managed businesses will continue to prosper over time.

 

As always, if you have any questions or concerns, I’d be happy to connect and discuss how this impacts your individual portfolio.

 

Have a great week,

 

Phil