Dear Clients & Friends,
We are living through a remarkable period of technological and economic change.
Artificial intelligence is transforming how businesses operate, how information is processed, and how people work. Companies are investing extraordinary amounts of capital in technologies that could fundamentally reshape entire industries. The potential implications for productivity, profitability, and economic growth are enormous.
And yet, despite all this innovation and opportunity, investors seem increasingly uneasy.
Stock prices have enjoyed several consecutive years of strong returns. Valuations in certain areas of the market are elevated. Interest rates and inflation remain concerns, and the financial headlines are filled with questions about whether the enthusiasm surrounding artificial intelligence has gone too far.
These concerns are legitimate. But they also highlight something important about investing that is easy to overlook:
Progress has never been a straight line, and participating in it has never been without risk.
The Engine of Long-Term Wealth
Consider how much the world has changed over the past several decades.
The internet transformed communication and commerce. Smartphones fundamentally changed how we live and work. Advances in medicine, automation, transportation, and computing have created opportunities that would have been difficult to imagine a generation ago.
Along the way, entire industries were disrupted, new businesses emerged, and established companies were forced to adapt or risk becoming irrelevant.
Not every innovation succeeded. Not every company survived. And investors who paid too much for even the most promising businesses sometimes experienced painful losses.
But the broader story has been one of extraordinary economic progress.
At its core, this is what long-term equity investing represents: ownership in productive businesses that innovate, compete, adapt, and create value over time.
When we invest in a diversified portfolio of businesses, we are not simply betting on stock prices moving higher. We are participating in the ongoing growth of the economy and the remarkable capacity of businesses to solve problems, improve productivity, and generate profits.
This distinction is important because it helps explain why we remain long-term investors despite the inevitable uncertainties along the way.
Innovation and Expectations
Today, artificial intelligence is capturing much of the world’s attention, and for good reason.
Its potential applications extend well beyond the technology companies making headlines. Healthcare, manufacturing, financial services, transportation, and countless other industries may benefit from the ability to operate more efficiently and accomplish more with fewer resources.
If these improvements translate into sustained productivity gains, the economic implications could be substantial.
But there is an important distinction between recognizing the potential of a new technology and determining what investors should be willing to pay for it.
A great business is not necessarily a great investment at any price.
History provides plenty of examples of transformative innovations that ultimately changed the world but did not reward every investor who participated in the excitement.
The internet is perhaps the most familiar example. The technology was revolutionary, and its long-term economic impact has been undeniable. Yet investors who purchased many internet-related companies at excessive valuations in the late 1990s experienced devastating losses when expectations collided with reality.
The lesson wasn’t that the internet had been overhyped as a technology. It was that even extraordinary progress can be accompanied by unrealistic investment expectations.
We may see similar challenges as artificial intelligence develops. Some companies will become enormously successful. Others will struggle to justify the capital being invested.
And the ultimate beneficiaries may not be the companies receiving the most attention today. We can believe wholeheartedly in the promise of innovation without believing that every investment associated with it is appropriately priced.
The Price We Pay
There is another side to progress that deserves our attention.
Economic growth and wealth creation have never occurred in a world free of uncertainty.
Recessions, inflation, rising interest rates, geopolitical conflicts, and market corrections have accompanied virtually every period of meaningful economic advancement.
The businesses we own must continually navigate these challenges. Some will succeed, others will fail, and the market will constantly reassess their prospects.
This is why equity investing has historically rewarded patient investors with higher long-term returns than more conservative alternatives. Those returns are not guaranteed, and they do not come without a cost.
That cost is uncertainty.
We cannot participate in the long-term growth of businesses while simultaneously eliminating the possibility of temporary declines in their market values.
Nor can we expect the market to reward us consistently, predictably, or according to our preferred timetable.
There will be periods when stock prices advance faster than earnings, and periods when earnings improve while stock prices struggle. There will be times when optimism becomes excessive and times when pessimism creates opportunity.
None of this represents a failure of the investment process.
It is simply the nature of owning businesses in an ever-changing world.
Participating Without Speculating
So, what should we make of today’s market environment?
I believe there are compelling reasons to remain optimistic about the long-term prospects for economic growth and American businesses. Innovation continues, companies are adapting, and new opportunities are emerging across the economy.
At the same time, optimism should never be confused with complacency.
Valuations matter. Diversification matters. And the amount of risk we assume should always be consistent with our individual financial objectives.
This is where thoughtful financial planning becomes especially valuable.
Our objective is not to identify the next technological winner, predict the next market correction, or position portfolios around the latest economic forecast.
It is to maintain an appropriate balance between the growth necessary to achieve your long-term goals and the financial stability needed to navigate life’s uncertainties.
That means owning a diversified collection of quality investments, maintaining appropriate liquidity, managing risk thoughtfully, and adjusting when your circumstances or financial plan warrant them.
It also means resisting the temptation to abandon a sound long-term strategy simply because the future feels uncertain.
After all, the future has always been uncertain.
Looking Beyond the Headlines
As we approach the final months of 2026, I suspect we will continue hearing plenty about artificial intelligence, stock market valuations, interest rates, inflation, and the possibility of an economic slowdown.
These are important developments, and we will continue monitoring them carefully.
But I would encourage you to view them through a broader lens.
The most meaningful financial progress rarely occurs over a few weeks, months, or even a single year. It unfolds over decades, as businesses innovate, economies evolve, and the power of long-term compounding has an opportunity to work.
Our responsibility is to position your financial resources to participate in that progress while remaining prepared for the inevitable setbacks along the way.
I remain optimistic about the future, not because I believe markets will always rise or that every innovation will fulfill its promise, but because I believe in the enduring capacity of people and businesses to adapt, solve problems, and create value.
Progress will never be free of uncertainty. But for long-term investors, the greater risk may be allowing that uncertainty to keep us from participating in it.
Thank you, as always, for your continued trust and confidence. It is a privilege to help you navigate an ever-changing world while keeping your financial goals and priorities at the center of every decision.
Best,
Nick
These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.
