NEWSLETTER | Q2 2026

The Long Game

As America marked its 250th birthday, the familiar images of Independence Day invite reflection: tall ships in the harbor, flags along Main Street, and fireworks rising above the skyline. Those symbols tell one part of the American story. Another, less visible but equally important, has unfolded through the country’s capital markets, the system that has helped turn ideas, savings, businesses, and risk-taking into long-term economic progress.

That story began in modest fashion. In 1792, a small group of brokers signed the Buttonwood Agreement, a short pact designed to bring order and trust to securities trading in New York. From that simple framework grew the New York Stock Exchange and, over time, a market system that would become central to American growth. The tools have changed beyond recognition since then, but the basic idea remains familiar: investors supply capital, businesses put it to work, and both share in the risks and rewards that come with building for the future.

Across two and a half centuries, the market has repeatedly been reshaped by crisis, innovation, and reform. The crash of 1929 exposed the need for stronger disclosure and oversight. Black Monday in 1987 revealed how quickly technology and automated trading could amplify fear, eventually leading to safeguards such as circuit breakers. Ticker tape gave way to screens, trading floors gave way to data centers, and a marketplace once reserved for a relatively small group of participants became part of the retirement plans, college savings, and long-term goals of millions of households.

That long history is useful precisely because today’s headlines can feel so urgent. This letter is not an attempt to draw perfect comparisons between past and present; markets never repeat in neat lines. But they do rhyme. Enthusiasm gathers around new industries. Leadership changes hands. Fear arrives suddenly and often feels permanent while it lasts. Keeping that broader perspective in view is an important part of how we think about portfolios, risk, and opportunity.

The Next Great Industry, and the Same Old Lesson

Every generation has had an industry that seemed to define the future. Railroads compressed distance and opened the country. Radio changed communication. Automobiles, aviation, personal computers, the internet, and smartphones each altered daily life and business in ways that were real and lasting. In each case, the excitement began with a genuine breakthrough. The challenge for investors came later, when optimism, capital, and competition all rushed toward the same opportunity.

Artificial intelligence belongs in that same conversation. We do not view it as a passing fad or a narrow technology story. AI has the potential to influence productivity, software, research, health care, manufacturing, and many other areas of the economy. History suggests, however, that recognizing the importance of a technology is only the first step. The harder work is determining which companies can convert that promise into durable profits, and whether the price paid already assumes too much of the future.

That distinction guides how we are approaching AI in client portfolios. We want exposure to meaningful innovation, but we do not believe participation requires owning every popular company or following every headline. Some opportunities may be found in businesses directly tied to artificial intelligence. Others may come from the less visible infrastructure behind the buildout: power generation, grid capacity, cooling systems, specialized equipment, and other mission-critical components. In other words, we can believe in the theme while still being selective about the path we take to invest in it.

Selectivity matters even more when broad indexes become concentrated in a small group of companies tied to a similar narrative. An investor may own the S&P 500 and feel broadly diversified, yet a growing share of that exposure depends on a relatively narrow set of AI-related technology names. We do not want portfolio weightings to be determined simply by what has become largest in the benchmark. A strong company can still become too large a position. Our objective is not to predict the exact top of any trend, but to prevent a successful investment from quietly becoming an outsized risk.

Leadership Never Stands Still

Market leadership has never been fixed. When the Dow Jones Industrial Average was introduced in 1896, it reflected an economy built around sugar, leather, rubber, railroads, and heavy industry. None of the original twelve companies remain in the index today. General Electric endured the longest, but even it eventually rotated out. The point is not that strong businesses disappear overnight. It is that the market’s definition of leadership changes as the economy itself changes.

That evolution has continued across every major chapter of American growth. Banks and railroads financed and connected a young country. Oil, steel, and automobiles powered industrial expansion. Later, consumer brands, health care, telecommunications, computers, and software helped define new eras of market leadership. Companies rise because they solve the problems of their time. But new problems emerge, technologies improve, customer behavior shifts, and capital moves toward businesses better suited for the next phase.

Portfolios should be built with that reality in mind. Discipline does not mean refusing to own what is new, nor does it mean clinging to yesterday’s winners because they once worked well. It means continually asking whether each holding still earns its place, whether a successful position has become too large, and whether opportunities are developing outside the most familiar parts of the market. Diversification, rebalancing, and ongoing research are practical tools for keeping portfolios aligned with long-term goals while remaining responsive to change.

The Panic, Too, Shall Pass

Just as leadership changes, fear also returns in different forms. Market history is filled with moments when the headlines made it seem as though the world had changed permanently. Investors have lived through wars, inflation, bank failures, recessions, depressions, financial crises, pandemics, elections, and sharp policy shifts. In 2008, the financial system came under extraordinary strain. In 2020, economic activity stopped with unusual speed as the world responded to COVID-19, producing both one of the fastest bear markets and one of the fastest recoveries on record. Elections and policy uncertainty can add pressure as well. Each episode felt distinct while it was happening.

The lesson is not that markets always recover quickly or that every decline should be dismissed. Some recoveries are rapid; others require years of patience. But market recoveries often begin before the news feels better, before the economy appears healthy, and before confidence has fully returned. Selling in the middle of fear can therefore create a second risk: being out of the market when the recovery begins. Over long periods, American enterprise has continued to adapt, capital has moved toward new opportunities, and patient investors have benefited from remaining connected to that progress.

At the same time, patience should not be confused with complacency. Some downturns are driven mostly by temporary fear; others expose deeper imbalances that take time to work through. Risk management is not about pretending the storm is harmless. It is about building durable portfolios before the storm arrives so clients are not forced into poor decisions when conditions are most uncomfortable.

That is why portfolio construction begins with purpose. Time horizon, cash needs, risk tolerance, liquidity, quality, diversification, and each client’s broader plan all matter before the next headline arrives. Short-term events deserve attention and may call for thoughtful adjustments, but they should not overturn a long-term strategy built for decades rather than days. Anxiety eventually fades, although rarely on a schedule investors would choose. A disciplined plan gives portfolios the structure to endure those periods without losing sight of the destination.

The Bigger Picture

The modern market moves at a speed earlier generations could not have imagined. Information reaches investors instantly, prices adjust in seconds, and speculation can travel around the world before breakfast. Yet speed has not replaced perspective. If anything, it has made judgment, discipline, and patience more important. Those qualities remain at the center of how we manage the responsibility you have entrusted to us.

The fireworks may fade, but the longer story continues. American markets have endured for more than two centuries because they have adapted through crisis, innovation, reform, and reinvention. The businesses we own for you are not intended to serve a single quarter. They are held because we believe they can compound value over time. History continues to favor investors who give that process room to work.

Happy 250th, and we wish you and your family a safe and enjoyable summer.