Our PFA investment committee met this week for our regularreview of the markets, economy,and our investment models. Although June and July were somewhat weaker monthsfor the markets than April and May, overall market and model performance has remained strong this year. U.S. stocks have continued their trend up thusfar in August and have reached new all-time highs thanks to great corporate earnings.[1]
Whilewe’re happy with recent performance, we also remaina little cautious given there are a few headwinds facing us. First and foremost, midterm elections are approaching, and that has historically been a weaker period for stocks. Markets likecertainty. When investorsdon’t know who will be in charge, markets typically pause their rally or experience a sell off. Next, inflation remains stubbornly high,and several members of the Federal Reserve have mentioned that they’d like to raise interest rates soon to help slow down inflation. Higher interest rates generally sloweconomic growth and decrease corporate profitability – both of which weigh on stock prices.Lastly, the war with Iran continues to drag on with no end in sight; the outlook continues to change frequently.
If you need cash to replenish bank savings oranticipate a large expenditure in the next 6 months, now may be a good time to take money from your investments given that markets continue to hit record highs. As you may recall, we made a slight reduction to our U.S. stock allocation last month and moved those proceeds into money market. If markets drop in the next few months, this will give us an opportunity to buy back in at lower levels. If markets don’t drop, we’llbe happy that the rally has continued.
We’re always happy to help, so please reach out if you have any questions or want to talk about your situation specifically.
Sincerely,
Your PFA Investment Committee
[1]https://bilello.blog/2026/the-state-of-the-markets-august-2026