When Signals Reverse
Markets have kept climbing, but the tensions beneath the surface haven’t disappeared — they’ve just shifted shape. This quarter, we revisit four signals from our last letter: the Fed held rates in July, but only narrowly; the Middle East ceasefire proved fragile before diplomacy resumed; market breadth has broadened meaningfully, with most S&P 500 stocks now above their 200-day average; and concentration in Tech and AI-adjacent names remains historically high at roughly half the index.
The encouraging sign: 2026 has seen the equal-weighted S&P 500 outperform the cap-weighted index, suggesting market leadership is broadening after 15+ years of concentration — potentially early evidence of a more diversified, fundamentals-driven environment ahead.
Our approach hasn’t changed: we remain focused on growing dividend income, downside risk mitigation, and alpha generation, anchored to durable businesses and disciplined valuation rather than chasing any single narrative.
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