Second Quarter 2026 Client Investor Letter

Global markets staged a strong recovery in the second quarter, reversing much of the volatility from earlier in the year. A sharp decline in energy prices helped ease inflation concerns, and investors refocused on what has led to several years of solid returns: strong corporate earnings and the continued buildout of artificial intelligence.

Encouragingly, this rally has been built on fundamentals. Corporate earnings have grown faster than stock prices, leaving valuations more reasonable today—even after the market’s strong advance. That said, much of the market’s recent strength has been concentrated in its hottest stocks, which is why we remain focused on quality, balance, and owning proven businesses.

As always, our focus is on managing risk while positioning portfolios to compound over time. In the attached letter, we highlight:

• What’s behind the economy’s resilience—from a healthy job market and easing inflation to the boost from rising asset prices
• Why earnings growing faster than stock prices has improved the market’s foundation, despite headlines about “bubbles”
• How we’re navigating a rally led by the market’s fastest-rising stocks—favoring established technology leaders over more speculative names
• How we’re keeping portfolios balanced—participating in the AI investment cycle while trimming extended positions and redeploying into other quality companies
• Why short- to intermediate-term bonds continue to offer attractive income and flexibility

Please contact us if you want a copy of the entire letter.