Dear Client, Partner, Prospective Client, One of the questions we have been receiving most often lately is whether today’s Artificial Intelligence (AI) boom resembles the Dot-Com Bubble of 2000-2001. It is a fair question. Many investors remember the excitement surrounding the internet, followed by the painful collapse that wiped out years of gains. While there are certainly similarities between then and now, we believe there are also some very important differences that should give long-term investors perspective. The similarities are easy to see. Just as investors believed “the internet changes everything” in the late 1990s, today’s narrative is that “AI changes everything.” Stock prices of many technology companies have risen dramatically, valuations for some AI-related businesses have become stretched, and ...

Dear Client, Partner, Prospective Client,  After three consecutive years of double-digit gains, we finally have that pullback in the first quarter of 2026 for which we are long overdue.  This is healthy for the markets as we, alongside many other investment managers, own a number of large information technology and growth companies that are overvalued or have run up a little too high.  We believe market volatility will continue for a few reasons.  Iran situation/Geopolitical concerns  Tensions between the U.S. and Iran remain elevated, centered on access through the Strait of Hormuz, a critical global energy shipping route. Even partial disruptions have driven oil prices higher and contributed to broader market volatility. Recent breakdowns in diplomatic talks and increased military enforcement around Iranian ports have sharply reduced shipping traffic, keeping energy markets on edge. Until there is clear progress on ...

Dear Client, Partner, Prospective Client,  The past year was the third consecutive year of double-digit gains in the market after a rough 2022.  That’s happened several times in history including most recently from 2019-21.  So, as you can see the market has been roaring here for twelve plus years with one-year stumbles in 2015, 2018 and recently 2022.  It’s been good and fortuitous to be an equity investor.  Can this run-up continue?  We are cautiously optimistic because streaks of strong performance are usually followed by periods of increased volatility or market correction.  The S&P 500 is not an equally weighted index and if you have not owned companies like Amazon, Apple, Meta, Nvidia, Microsoft, Tesla and Alphabet, you have likely missed out on some huge gains.  Most growth-oriented funds and money managers have had to own these, whether they liked the valuations or not.  Otherwise, it’s tough to keep up with the performance of ...

Dear Client, Prospect, Partner:  The markets continue to rise, and the S&P 500 continues to set daily all-time highs, rising 8.1% in Q3.  The Nasdaq 100 surged nearly 50% from its April bottom, driven by AI enthusiasm.  Small cap stocks rallied with the Russell 2000 up 12.4%.  The momentum continues to carry on and we are cautiously optimistic that this run will continue. Tech & communication services led gains, while consumer services and health care lagged. Gold hit record highs, up 17% signaling investor caution and bond yields fell, boosting fixed income returns. Valuations do seem stretched, as in the US. Equities trade at a 3% premium to fair value.  Small-cap and value stocks are undervalued and seem to hold some good opportunities. As a firm we will continue to diversify across several sectors and monitor AI-driven mega-cap tech stocks we own for signs of overvaluation. Other than the large market stumbling in the month ...

Dear Client, Prospect, Partner:  What a difference a quarter makes!  While the markets looked bleak and at times were uncomfortable, they snapped all the way back.  Has the storm passed or are we in the eye of the hurricane?  We continue to have volatility with President Trump announcing his intent to raise tariffs on various countries, but the temperature usually lowers after an initial spike.  Furthermore, when there is an agreement communicated with the U.S. and another country, the markets have responded favorably.  These discussions or rather, demands by President Trump appear to be ongoing and the timelines are in question.  We will see how this materializes.  U.S. payrolls increased by 147,000 in June, which was more than expected at 110,000. Government employers posted a large gain leading all categories with an increase of 73,000 due to solid local and ...

Dear Client, Prospect, Partner:  The Trump bump has disappeared and in its place are market volatility and pain that we haven’t seen since 2020 during the COVID crisis.  There are also not many places to hide. The volatility on Monday and Tuesday from the market open to market close has been unbelievable. To some extent, we think this was expected and potentially healthy for our highly valued and highly appreciated U.S. stock market.  Now, we stayed the course in 2020, and it turned out to be a phenomenal year of market growth.  This time: it may be different.  It could also be a huge opportunity for investors.  Peter Lynch, former manager of the Fidelity Magellan Fund from 1977-1990, had the well-known quote of “invest in what you know.” I adopted that a long time ago and have stayed true to it.  Mr. Lynch had an annualized return of 29.2% during those ...

Dear Client, Partner, Prospective Client: The Minnesota Vikings were picked by many to be in rebuilding mode and estimated to have 6.5 wins and ended up being 14-3 in the regular season. Every expert and critic were dead wrong. To my long-standing Michigan clients and diehard Detroit Lions fans, we hope we get another crack at you. Both states would love to have a NFL Championship! And if you think forecasting football is hard, try the economy, stock market and elections. Not one Wall Street firm came close to predicting the S&P 500 year-end level on 12-31-2024. They were all too low. The sharp slow-down in the economy or predictions of a recession did not materialize. Politically, Republicans have swept ...

Dear Client, Partner, Prospective Client,  It has been an interesting and challenging year from an investment strategy standpoint.  The S&P 500 has roared and if you haven’t owned that index or owned the Mega caps including: AMZN, NVDA, AAPL, META, MSFT you are trailing the market and disappointed you didn’t get in on that dynamic action.  That will subside though and there’s a good chance it happens in the first two quarters of 2025.  The Federal Reserve will dictate the pace of some of these slowdowns, pauses and corrections based on how fast they continue to drop rates.  The media seems to salivate on their every word that relates to interest rate adjustments.   The CPI (ConsumerPrice Index) dropped to 2.4% in September, which was slightly better than August at 2.4%.  This is the smallest increase since February of 2021. The Unemployment rate dropped slightly from 4.2% to 4.1% in September or just barely but moving in the right direction. Hopefully, the job ...

Dear Client, Prospect, Partner,  The tech and AI rally have continued to rage on as we enter the summer months.  Can it continue is the question?  We’ve shifted some of our portfolio over to information technology, Artificial Intelligence and other industries connected to these spaces to enhance the possibility of gains. The markets will probably continue to run upward through the election in November.  Mega Caps continue to provide the steam for the S&P 500’s growth in 2024.  As I’ve mentioned in the past an equally weighted S&P 500 Index would not be up double digits so far this year.  The growth of Nvidia, Microsoft, Amazon, Apple, Meta, and others have propped up the gains so far in the first six months of the year.    We have increased our utilities exposure to play some defense as the momentum of the Mega Caps continues.  The average member within the Nasdaq has had a >35% drawdown from its peak this year while the Nasdaq 100 Index has had no more ...

Dear Client, Prospect, Partner:  Does this rally that started in early November 2023 have the legs to continue?  The market run-up has subsided here in the last week, but we will see what earnings season has in store for us as the banks report including JP Morgan, Citigroup and Bank of America today and next week.  It’s especially interesting for us as holdings such as Lululemon, Palo Alto Networks and several others had strong fourth quarters, but the outlook was tempered, and the stocks were punished.  Both of these have been tremendous 5-year holdings so we will see if the outlook and earnings expectations are better this time around.  The March jobs report surprised many economists to the upside as the labor markets continue to demonstrate growth.  Nonfarm payrolls jumped by 303,000 in March, which was considerably higher than the anticipated 195,000 figure.  The unemployment rate fell slightly to 3.8%.  Since August of 2023 the unemployment ...