June began with the market still trading every Iran headline like a live grenade. By month’s end, investors had something more comforting: not peace, exactly, but enough of a pause to stop pricing in catastrophe.

The U.S. and Iran moved toward an interim arrangement to halt hostilities and allow commercial shipping through the Strait of Hormuz. Oil, the market’s most visible anxiety gauge, retreated sharply. Stocks responded as they have throughout this conflict: not by demanding resolution, but by rewarding evidence that the worst outcomes are not taking hold.
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That was the good news.

The less cheerful news is that the oil shock has already worked into the economy. The Fed’s preferred inflation gauge rose 4.1% in May from a year earlier, the highest reading in three years. Core inflation climbed to 3.4%. In other words, this is no longer just a gasoline story. Price pressure has broadened enough that the Federal Reserve can no longer wave it away as temporary inconvenience. Both the S&P 500 and Nasdaq will close down for the month.

The Fed Gets Religion

Kevin Warsh’s first meeting as Fed chair was not dramatic in the usual sense. The Fed held rates steady at 3.50%–3.75%, exactly as expected. But the message underneath the decision changed: officials are no longer leaning toward lower rates later this year. In March, the market could still imagine a rate cut. By June, that door had mostly closed. If inflation stays hot, the next move may be higher rates, not lower ones.

The market began the year assuming Warsh would be friendlier to lower rates than Powell. Maybe he still will be over time. But inflation forces discipline on even ambitious central bankers. Warsh arrived with reformist instincts, but inherited an inflation problem, an energy shock, and a market that has already priced in plenty of good news.

AI Goes Physical

Fortunately for the bulls, the market still has a powerful engine: artificial intelligence.

But the AI trade is changing shape. Earlier phases rewarded software, cloud platforms, language models, and anything with enough buzzwords to frighten a corporate board. Now the money is moving closer to the machinery itself: memory chips, storage, networking, power, cooling, data centers, utilities, electrical equipment, and the industrial plumbing needed to make AI function.

This is the move from cloud to concrete.

AI may be digital, but in practice it is very physical. It needs land, power, copper, chips, cooling systems, and grid upgrades. Investors are rewarding the companies supplying the picks and shovels, not just the companies promising productivity miracles somewhere over the rainbow.

The downside is that this has become a momentum market, and momentum stocks do not walk down stairs politely. They fall out windows. Micron and other memory names pulled back sharply late in the month, reminding investors that even strong themes can become crowded trades.

“We’re in the biggest momentum market in decades, and those momentum stocks are going to be exceptionally volatile,” says Jed Ellerbroek, a portfolio manager at Argent Capital Management.

Going Forward

The bullish case remains intact but narrower. Iran tensions cool. Oil stays contained. Inflation peaks. The Fed holds. Earnings remain strong. AI spending keeps flowing into companies with real orders, pricing power, and profit leverage.
That is enough to keep stocks moving higher.

The bearish case is equally clear. The ceasefire frays. Oil rises again. Inflation remains above 4%. The Fed tightens. AI leaders stumble. Valuations stop receiving the benefit of the doubt.

That would not require a recession. It would only require disappointment.

Bottom Line

June did not resolve the market’s biggest questions. It rearranged them.

The Iran shock eased, but inflation did not. The Fed held steady, but sounded less forgiving. AI remains the market’s central growth story, but leadership has shifted from software dreams to physical infrastructure.

That may be healthier than the old AI trade. Concrete is harder to fake than hype. But it also means the market is leaning on a capital-spending cycle that must keep delivering.

For now, earnings and AI are winning. Just don’t confuse “winning” for risk-free.

And For What It’s Worth…

A 70-year-old Texas man intentionally drove his Tesla Cybertruck into Grapevine Lake near Dallas to test its "Wade Mode." After driver Jimmy Jack McDaniel abandoned the partially-submerged vehicle, he was arrested and charged with offenses including boating without a license.

According to the Tesla manual, “Wade Mode” is designed for crossing shallow bodies of water (rivers or creeks) up to a maximum depth of 32 inches.
​
Sounds to me like “Wade Mode” works fine — right up until you need “Float Mode.”​

​_____
​As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount.

​--David

March, in Review

After brushing record territory earlier in the quarter, equities turned lower through March in a steady, grinding fashion. As of the March 30 close, all three indices—the S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average—are now in correction territory, defined as a decline of at least 10% from recent peaks.

Importantly, this has not been a disorderly selloff. There has been no capitulation, no panic flush—just a persistent repricing of risk. As CNBC’s Mike Santoli noted, the market has entered that uncomfortable phase where declines feel controlled, but conviction begins to erode.

That distinction matters. Sharp selloffs tend to reset expectations quickly. Slow ones tend to linger.

Update (March 31): Markets are moving higher today on unconfirmed reports that Iran’s leadership may be open to ending the conflict under certain guarantees—something the regime had hinted at earlier this month. Whether the reports prove accurate or not, the reaction is instructive: in an environment like this, sentiment can turn on a headline.

The Drivers Now

Geopolitics and Oil

The most immediate driver has been energy. Oil prices have surged dramatically, with Brent crude posting one of its largest monthly increases on record as the conflict disrupted flows through the Persian Gulf.

That surge is doing double duty—pushing inflation expectations higher while simultaneously threatening growth. Higher fuel costs ripple through transportation, manufacturing, and consumer spending. Historically, that combination has not been kind to equities.

Markets, in effect, are attempting to price a moving target: a conflict that could resolve quickly—or widen unpredictably. Until that range narrows, a risk premium remains embedded in energy and, by extension, in stocks.

The Federal Reserve: Stuck in Neutral

The Federal Reserve has responded by staying put.

Rates were held steady in March, with policymakers emphasizing uncertainty above all else. Higher oil prices complicate the picture. They are inflationary by nature, even as they risk slowing economic activity. That leaves the Fed caught between mandates, and markets without the policy support that defined much of 2024 and early 2025.

For much of the past year, policy provided a quiet tailwind. Today, it’s more accurately described as absent. The Fed isn’t tightening—but it isn’t coming to the rescue either.

AI, Private Credit, and “Residual Anxiety”

Layered on top of geopolitics is a market already dealing with internal strain.

February introduced the idea that AI may create losers as well as winners. March extended that concern into adjacent areas—private credit, software, and any business model dependent on cheap capital or future assumptions.

As Olaolu Aganga, head of portfolio construction for Citigroup's wealth-management division, put it, “It’s only March, and we’ve had AI angst, private credit angst, and now we have a war.”

That accumulation matters. Markets can absorb one source of uncertainty. Several at once tend to reinforce each other.

Going Forward

The market’s direction from here hinges less on earnings—which remain relatively stable—and more on resolution. There are, broadly, three paths that could shift sentiment:

• De-escalation in the Middle East, leading to lower oil prices and a rapid compression of the geopolitical risk premium
• A softer inflation trend, reopening the door to Federal Reserve easing
• Policy intervention, either fiscal or monetary, should financial conditions tighten further

Absent one of those, the current environment likely persists: higher interest rates, elevated volatility, and a market searching for footing.

That doesn’t preclude rallies. In fact, oversold conditions could produce sharp, short-term rebounds. But until the underlying uncertainties begin to resolve, those moves are likely to be tactical rather than durable.

That said, not all views are uniformly cautious. Fundstrat’s Tom Lee has suggested that while the Iran conflict is dominating the near-term narrative, markets will ultimately shift focus back toward opportunity in the second half of the year—assuming conditions stabilize.

That’s the tension: short-term uncertainty versus longer-term earnings resilience—and a resumption of the bull.

And For What It’s Worth…

As reported in The Week, a Chicago-area man is suing an animal sanctuary for the return of his “emotional support hog.” Kenneth Mayle says he acquired Chief Wiggum as a piglet in 2016 and surrendered him to the sanctuary while experiencing “temporary housing difficulties” in 2018. Those difficulties have been resolved, says Mayle, yet the sanctuary refuses to return his now 330-pound hog, which Mayle says was trained to provide “therapeutical benefits, including massage therapy.”
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So, a heads up to all the software engineers seeking a career alternative immune to AI. While massage therapy might have looked like an option, we see now its future is threatened as well… by swine. 

​_____
​As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount.

​--David

January was a reminder that this market has become unusually good at separating signal from spectacle.
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The headlines were loud: tariff threats tied to Greenland, renewed questions around Federal Reserve independence, sharp one-day selloffs—and just as sharp reversals. Yet by month’s end, equities were still near record territory, leadership remained intact, and volatility failed to stick.

That contrast tells the story. Investors are no longer reacting reflexively to political noise. Instead, they are focused on whether headlines interfere with rates, earnings, or capital flows. When they don’t, selloffs tend to fade quickly.

Meanwhile, the market’s familiar pillars held. Earnings season began with resilience rather than fireworks. AI spending remained robust, though no longer unquestioned. And the Federal Reserve reinforced that policy is no longer the market’s tailwind—but not yet its headwind.

The Fed: New Chair

President Trump said this morning that he will nominate Kevin Warsh to be the next chair of the Fed. Warsh would replace Jerome Powell when his term expires in May. The appointment, which requires Senate confirmation, amounts to a return trip for Warsh, who was a member of the Fed’s board from 2006 to 2011.

The selection was likely to ease concern about Fed independence. While Warsh is expected to push for lower rates in the short term, the financial markets view him as someone who wouldn’t always follow the president’s direction and, importantly, maintain credibility for monetary policy.

In other news, and separate from the leadership change, the Federal Reserve under current chair Jerome Powell held its policy rate steady at 3.5%–3.75% in late January, signaling patience rather than urgency. Growth remains firm. Inflation is improving, but uneven. And the labor market is stable enough to give policymakers time.

Earnings: Still the Adult in the Room

As earnings season ramps, tolerance for disappointment looks thin. With valuations elevated, results matter more than narratives.

Just yesterday, Facebook parent Meta’s strong outlook reinforced the bullish case for sustained capital investment in AI. At the same time, Microsoft’s slowing cloud growth and margin pressure triggered sharp declines across software stocks, pushing parts of the sector into bear-market territory.

AI is still lifting the market—but it is also testing it, with investors increasingly focused on returns rather than promises.

Going Forward
​

• Best case: Earnings growth remains the primary driver. AI spending continues, but leadership becomes more selective. Markets grind higher, with volatility concentrated around data and earnings—not headlines.
• Wild cards: Tariff uncertainty, including the looming SCOTUS decision, and Fed credibility - not so much from policy decisions as from perceptions of independence and continuity.

And a reminder from Fundstrat’s Tom Lee, who said as much in December but further elaborated just three days ago on CNBC:

“I think 2026 has the same contours as last year. 2026 is a good fundamental earnings story. But we have two transitions to deal with: one is a new Fed Chair – the market always tests a new Fed Chair. That’s one source of a drawdown. The second is policy... [and the] uncertainty around tariffs. Last year, that was enough to drive a 20% decline in the S&P 500.”

That said, Lee continues to believe the market ends the year higher.

Bottom line

January didn’t change the market’s narrative—but it sharpened its edges.
​
This remains a market supported by earnings, durable AI investment, and a Federal Reserve that can afford to wait. At the same time, valuations leave little room for error. A time to stay invested, but not over your skis.

And For What It’s Worth…

As reported by The Times, the Bank of England has been urged to plan for a financial crisis sparked by aliens.

Helen McCaw, a former senior analyst in financial security at the UK’s central bank, has written to the Bank’s governor urging him to organize contingencies for the possibility that the White House may one day confirm we are not alone in the universe. McCaw, a Cambridge graduate, believes a declaration of that magnitude would send shockwaves through the markets and could trigger bank collapses and civil unrest.

Highly unlikely? Sure. But if it ever happened, it would turn spectacle into signal in a hurry. 

​_____
​As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount.

​--David

And then — just as quickly — it was over, as the President largely backtracked.

From the April lows, the S&P 500 launched into a near-vertical recovery, vaulting out of its hole and closing the year up 16% and change. The episode was a blunt reminder of how modern markets work: policy shocks tend to get priced in far faster than the real economy can absorb them. Panic, in this cycle, proved fleeting.

That pattern defined 2025 more broadly. Tariffs, political noise, delayed rate cuts — all produced moments of genuine stress. None produced lasting damage. Markets bent, recalibrated, and moved on.

A Quick Word on the Strategies

For the subscription strategies and the new WealthDAC Portfolios, 2025 was green across the board, with Lean Muscle and The 12% Solution off their game but still positive, and the Aggressive Portfolio, Five Stocks, and Global Trader providing solid returns at 24%, 22%, and 21% respectively. That said, all gains were rarely smooth. April’s selloff tested discipline. The recovery that followed tested patience.

What mattered most is what didn’t happen. Risk stayed contained. Drawdowns remained within design parameters. Correlations behaved when stress arrived. In a year where markets punished emotional reactions more than incorrect forecasts, discipline did its job.

That matters heading into 2026, because the next year is unlikely to offer the same forgiveness.

Expectations for 2026: Gains, With Friction

Wall Street enters 2026 optimistic — but with more qualifiers than a year ago. Strategist forecasts cluster around ~10% upside for the S&P 500, a clear deceleration after three consecutive years of double-digit gains.

The Bull Case: Analysts are pointing to several high-octane "fuel sources" for 2026:

• Strong Corporate Earnings: Analysts widely anticipate a third consecutive year of double-digit S&P 500 earnings growth in 2026, with smaller and mid-cap stocks participating.
• AI Revolution Continues: The artificial intelligence theme is expected to drive significant productivity gains across various industries.
• The IPO Renaissance: Potential trillion-dollar public debuts from SpaceX and OpenAI could trigger a massive wave of fresh capital and excitement.
• The "Refund" Effect: Tax legislation in 2026 is expected by some analysts to provide substantial tax refunds to consumers and a liquidity boost for retail investors.

The Bear Case: It’s not all clear skies. There are two major yellow flags investors are watching:

• The Fed Transition: Jerome Powell’s term ends in May 2026. History shows that the first six months of a new Fed Chair’s tenure can be rocky, often seeing a market correction of around 15% as the newcomer finds their footing (according to historical averages cited by Ned Davis Research).
• Valuation Froth: The Shiller P/E ratio, a measure of stock market valuation, is sitting at roughly double its long-term average. Some analysts, like those at Ned Davis Research, warn we are on a "sugar high" that leaves stocks vulnerable to any unexpected bad news.

Fundstrat’s Tom Lee captured the tension succinctly: “That 10% [gain] masks what I think will be a very turbulent year. We could have something that feels like a bear market at times but still exit the year higher.”

That may be the cleanest base case: acceptable returns earned the hard way.

Bottom Line: 2025 proved that the U.S. economy can absorb a lot of "political upheaval" as long as earnings and innovation stay on track. For 2026, the question is no longer "Will we grow?" but "How much of that growth have we already paid for?"

And For What It’s Worth…

​As reported by The Week, the public launch of a Russian AI-powered robot took an embarrassing turn when the android faceplanted. The firm Aidol premiered the humanoid robot for dozens of journalists at a Moscow technology conference. But as the robot staggered across the stage to the theme song from Rocky, it collapsed in a heap – parts flying. [NY Times Instagram video]

The frantic staff tried to shield the scene with a black curtain as they dragged it off stage. “It’s the first robot with alcoholism,” cracked a defense analyst. Aidol head Vladimir Vitukhin called the debacle an opportunity for “real-time learning.”

Even in artificial intelligence, progress is rarely linear — and resilience still requires a reboot or two.
​
​_____
​As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount.

​--David

Wall Street has a superstition problem. “Octoberphobia” is the name traders give to the month’s track record of unnerving declines—the 1907 Bank Panic, 1929’s crash, 1987’s Black Monday, all etched into market lore.
​
The irony? Despite the ghosts of Octobers past, the market often comes out stronger on the other side.

​This year, the fear arrives just as stocks closed out an unusually strong September, leaving investors asking whether the calendar alone can derail a bull run built on AI enthusiasm and a newly dovish Fed.

​September in Review

September defied its reputation as the market’s weakest month. The S&P 500 rose just shy of 3%, the Dow gained 1.5%, and the Nasdaq led with a 5% rally. Nvidia’s rebound late in the month underscored that the AI capex (capital expenditure) story—tens of billions flowing into infrastructure—remains intact. Even small-caps caught a spark after the Fed delivered its first rate cut in nine months, a quarter-point “risk management” move aimed at softening labor conditions.

Not everything was smooth. A wobble in AI stocks mid-month triggered the S&P’s worst weekly showing since August. And while the Fed’s cut provided relief, Chair Jerome Powell’s language suggested restraint: this wasn’t the start of a firehose of liquidity.

Add in tariff shocks and political theater—including a looming government shutdown that threatened to delay key data releases—and markets had plenty to juggle. Still, investors mostly looked through the noise.

Drivers Now
​

• Federal Reserve: The September cut was followed by projections for two more this year, though Powell emphasized moderation.
• Economy: Q2 (second quarter) GDP was revised up to 3.8%, consumer spending remains robust, and inflation data show core PCE stuck at 2.9%. A strong economy paired with sticky prices complicates the Fed’s calculus.
• Politics: Shutdown brinkmanship is once again a headline risk. While history says shutdowns rarely dent markets for long, the risk this time is delayed data—particularly jobs and inflation prints—that the Fed depends on.
• AI Momentum: Nvidia and Microsoft announced a massive buildout of AI data centers, keeping the growth narrative alive. Barclays’ Venu Krishna: “Concentration warrants some caution, but with AI gaining momentum as the focal point of global growth, the S&P 500 should be well positioned.”

October Outlook

The question is whether “Octoberphobia” bites. History says caution, but context suggests resilience:
​

• Seasonality vs. Setup: In post-election years since 1950, October has actually averaged a gain. Jeffrey Hirsch of the Stock Trader’s Almanac notes that when bearish seasonality fails to materialize, “it’s a bullish indication that more powerful forces are at play.”
• Valuations and Risk Appetite: Yes, valuations remain elevated. Bank of America’s Michael Hartnett warns the setup resembles past bubbles, but Deutsche Bank notes renewed momentum in high-risk baskets—signs that risk appetite is rising, not fading.
• Earnings Season: Q3 estimates have ticked higher, unusual for this point in the calendar. Results will test whether corporate profits can support lofty multiples.
• Policy Wildcards: Tariffs, shutdown threats, and Fed guidance at month-end all loom as potential catalysts.

Final Word

October’s reputation precedes it, but reputation alone doesn’t move markets. Investors are walking into the month with record highs, a Fed that has shown its hand, and AI spending that still looks like a freight train. Could sentiment wobble if shutdown noise drags on or inflation proves sticky? Certainly. But absent a true shock, the fear of October may once again prove scarier than October itself.

And For What It’s Worth…

A Pennsylvania man has lost his right to take his pet alligator, Jinseioshi, on Walmart shopping trips. The tastefully dressed reptile, certified as an “emotional support animal,” had reportedly been wheeled through stores in a buggy—mouth sticking out—before customers finally complained. Walmart, citing ADA rules (service dogs yes, miniature horses maybe, alligators no), issued a permanent ban.

Investors may recognize the parallel: markets will happily tolerate risk until, suddenly, someone notices there’s a six-foot alligator in the cart. ​

​As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection* remains paramount.

​--David

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* WHAT DOES PROTECTION LOOK LIKE? 

At the extreme, it’s cash. As I mentioned last month, it’s OK to hold some cash. Cash is, in fact, a position. It means you’re prepared to act when circumstances better align with your risk tolerance.
 
Protection can mean an overweight position in a model built for protection. Lower volatility and lighter drawdowns often indicate that a model is more protective in nature. Bond Bulls, for example, has the lowest volatility and max drawdown of any of the models.

Check out the updated white paper Conservative vs. Aggressive Portfolios for a list of all the strategies ranked from lowest risk to highest in terms of max drawdown.

Protection can mean putting multiple strategies to work in a portfolio, especially when those models tend toward an inverse relationship with each other, or focus on different asset classes or market sectors. Think Bond Bulls and American Muscle. Or Global Trader and The 12% Solution. Or even a bit of the Zen Knuckle combined with a couple of the above. 
 
Because each strategy uses a slightly different mechanism to identify market risks, and because each can employ different funds representing different market sectors (although there is obviously some overlap), there is beneficial diversification at work when using multiple strategies within a portfolio – helping to reduce volatility and max drawdown. 

Further down the page in Conservative vs. Aggressive Portfolios you can see examples of various combinations and how they have performed over the years. 
 
Protection can mean keeping an eye on provisional picks during the month. These can provide a heads-up on potential trends -- and breakdowns of existing trends. Look for asset class shifts (a switch from an equity fund to a safe harbor asset like cash or bonds, or the contrary).

See if such a shift holds up for a few days. Not every such move is a trading opportunity or justifies a rebalancing, but information is power.

Finally, employing stop-loss and stop-limit orders. A stop-loss order is an order placed with a broker to buy or sell a specific stock (or ETF) once that asset reaches a specific price. It's designed to limit an investor's loss on a security position. While not perfect, and you'll find my own pro-and-con thoughts on the Q&A tab in the Members Pages, stop-losses have their place in risk management.

Read more on the Investopedia page for Stop-Loss Orders.