By One thing I’ve experienced throughout my career is that when we have a good year in the markets, as we did in 2025, folks sure don’t seem to have many questions for their financial advisory team!
That said, when we have a stretch of market volatility, typically hand in hand with daily shock-and-awe news headlines — think the first two months and maybe three of 2026 — the (natural) reaction is — uh-oh.
In fact, it’s only normal for you to ask me, “How long is this going to continue, and is this the start of the next big recession?”
The answer to all those questions is, as always, I don’t know.
While that may sound unnerving, the fact is that no one on earth can a) control the ups and downs of the market, or b) know where the economy is headed next. For those of you who work directly with me, you’ve heard me say, “When the market is up and you’re happy, let’s celebrate the gains, but let’s not celebrate how smart Dave is. When your accounts are down, let’s discuss what’s happening, but don’t shoot the messenger”.
What I mean by that is, there are times when markets oscillate up and down for no apparent reason, despite the best efforts of talking heads fighting for viewers by putting their own spin on what’s happening in the financial world. (I encourage you to read “A Random Walk Down Wall Street” for a deeper dive into this idea.)
Let’s go back a year. We had a meltdown in the technology sector of the market due to China releasing Deepseek, which claimed to offer artificial intelligence tools at a fraction of what it cost American companies to do the same. Upon this news, the markets somewhat imploded, and paper losses mounted. The fear was that American companies had vastly overspent and underestimated Chinese companies’ ability to replicate the technology. The technology investing world was coming to an end. This was followed by all of the wild daily tariff declarations; certainly, the world was about to end, and this time we were really done for.
Then we ended 2025 with the S&P 500 up around 17% on the year.
Huh.
Fast forward to today. All we hear is that AI is going to destroy every industry known to man. Currently, every successful software company, including some of the greatest investments of all time in our market, is under constant selling pressure because the belief is that all software will be replaced by AI programs that will be able to do the jobs of thousands of employees who work across the spectrum of American businesses.
The fear is that we will no longer need human lawyers, consultants, or advertising firms. In many first-quarter earnings reports, we heard from companies leading the AI advancement that they collectively plan to expand their capital spend on AI and data centers, and Wall Street doesn’t like the fact that these capital expenditures are occurring because, in the short term, it potentially hurts margins, reduces stock buybacks, and bypasses the opportunity for investors to receive a dividend or dividend increase. In addition, the market is worried about venture capital companies that have invested in software and other startups that may never make it to market as advances in AI disrupt and ultimately eliminate their market opportunity, leading to large losses in the venture cap space.
I’m not going to give you my opinion on what will happen. Instead, I’ll offer you the opinion of Jensen Wang, who, as the CEO of Nvidia, reassured Wall Street on his conference call that the fear of all of this being replaced by AI is wrong.
If the guy who envisioned all of this is saying that AI is not going to do what everyone fears, then should we be panicking about volatility in some of the larger growth stocks we’ve seen this year? These companies are run by some of the smartest people in the world. Just like when Deepseek proved to be smoke and mirrors and the markets rebounded, I would suggest ignoring the volatility and the talking heads.
When you buy a stock, you’re not buying a lottery ticket. You’re buying a living, breathing piece of a company that, on a day-to-day basis, is going to change in value. But over time, you’re participating in the growth of that company. If that company happens to be one of the leading companies in any sector of the market and maintains that leadership, history shows that investors may end up with handsome returns.
So what are we doing in this environment? We rebalanced portfolios in January. We’ve had a good percentage of liquid cash, and, amid this latest fearmongering, we’re actively looking at opportunities to actually increase our positions on these stocks that are trading at discounts, not based on a 90-day outlook, but based on where we think things will be in 1, 5, and 10 years.
For clients who have worked with us for a long time, this update probably doesn’t shock you at all. You’ve heard me say this for 28+ years. Some of the money you entrusted us with in the second half of last year, we’ve been patiently waiting to add to the market. This will happen when we feel it is the appropriate time.
For those of you out there who continue to keep extra money in your checking and savings accounts, I’d be remiss if I didn’t say that this could be a great time to put those funds to work. But we can only do that if those dollars are in your investment accounts. Fund those IRAs; fund your kids’ college savings accounts; keep buying additional shares in some of America’s greatest companies.
Sometimes we’re worried about AI, sometimes it’s a war. (You may have forgotten that 2025 saw military strikes on Iran, as well.) You get the immediate market reactions, and we have to wait and see whether it’s a short-term thing or not. But none of it changes the long-term goals of some of the most successful companies in America. No, returns aren’t guaranteed, and yes, we must adjust along the way, but we’ve seen stories like this before.
The market is on sale; it happens a couple of times each year, and it’s a great time to add to your investment portfolio. For those of you who do not have a working relationship with us, this is also a great time to review what your current strategy is and see if there’s anything we can tweak to help you take advantage of this market volatility. Contact us today to have that conversation.
This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. It’s important to note that market performance can fluctuate due to various factors, including economic conditions, geopolitical events, and investor sentiment. While historical data provides insight into long-term trends, past performance does not guarantee future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
A Random Walk Down Wall Street is referenced for general educational purposes only and is not intended as investment advice.
Securities offered through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way Cincinnati, Ohio 45242 (513) 794-6794. Investment Advisory services offered through O.N. Investment Management Company.
Article by David Smyth, Senior Partner and Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.