I want to take a moment to address what has clearly been a difficult and unsettling period in the markets. When volatility rises and headlines become more extreme, it is natural for concern to follow. Periods like this tend to feel unique in the moment—but from a market history perspective, they rarely are.

Goldman Sachs recently noted that, despite current concerns, the risk to markets may actually be skewed to the upside if geopolitical tensions begin to ease. While no one can predict timing with precision, markets often move ahead of improving conditions—not after they become obvious.

After more than three decades in this business, I would not claim any special ability to forecast the future. However, experience does develop what I would call a “mechanics ear”—a sense for when markets are stretched. Over the past several months, it was relatively easy to identify pockets of excess and speculation. Today, the tone feels markedly different. Sentiment has shifted from optimism toward fear.

When markets decline in a persistent, almost relentless fashion, they often overshoot to the downside—just as they can overshoot to the upside during strong advances. That does not mean the decline must end immediately, but it does suggest that conditions are becoming increasingly stretched.

Right now, investors are grappling with a wide range of potential negative outcomes:

• Could geopolitical tensions escalate and become prolonged conflicts?
• Could oil prices spike dramatically?
• Could the Federal Reserve be forced to tighten policy into a weakening labor market?
• Could technological disruption create widespread economic dislocation?
• Could political instability rise domestically?
• Is there any safe haven beyond traditional assets?

Do these risks sound familiar? They are the kind of fears that investors have contended with for generations. What makes this time different? We think very little.

It is important to recognize that these concerns are often evaluated in isolation, as if each risk will fully materialize. In reality, the global economy is dynamic, and policymakers have multiple tools at their disposal. Conflicts can de-escalate quickly, central banks can adjust policy, and economic conditions can stabilize faster than expected.

Equally important, the current environment does not resemble past systemic crises such as the 2008 financial crisis, the bursting of the technology bubble, or the oil shocks of the 1970s. While uncertainty is elevated, the underlying economic structure remains more resilient than those periods.

At the same time, there is a powerful structural force underway that deserves attention: artificial intelligence. Recently, major corporate leaders—including the CEOs of Coca-Cola and Walmart—have openly stated that the rise of AI influenced their decision to step aside. Their reasoning was straightforward: the next phase of growth will require new leadership, new energy, and a deep understanding of how AI will transform their businesses.

That is a notable development. These are not speculative companies—they are among the largest and most established organizations in the world. When leaders at that level step aside specifically to position their companies for an AI-driven future, it reinforces just how significant this transition is.

In many ways, this shift may prove to be even more impactful than the internet revolution of the 1990s. The scale of investment we are seeing today reflects that. While there has been increasing discussion about a potential “AI bubble,” these types of leadership decisions suggest the opposite—that corporate America is treating AI as a long-term, foundational transformation rather than a short-term trend.

This helps to legitimize the substantial capital being deployed into AI infrastructure, software, and applications. Over time, we believe the stock market will be a primary beneficiary of this wave of innovation, much like it was during prior technological revolutions.

Market history provides helpful context:

• The Nasdaq has recently experienced one of its longest weekly losing streaks on record. Historically, declines of this magnitude have not extended indefinitely and have often been followed by recovery periods.
• The second year of the presidential election cycle (the current phase) has historically been the weakest, with significantly stronger returns typically occurring in years three and four.
• Elevated options activity—particularly spikes in put volume (negative sentiment)—has historically coincided with periods of heightened fear and has often preceded market rebounds, though this is not a guarantee.
• Midterm election years frequently include meaningful drawdowns, but they have also historically produced strong forward returns over the subsequent 12 months.
• Goldman Sachs currently projects S&P 500 earnings growth supporting a longer-term index level of approximately 7,600 by year-end 2026, reflecting a constructive outlook beyond current volatility.

These historical patterns are illustrated in the accompanying charts:

S&P 500 Midterm Election Year Declines & Recoveries (Source: First Trust)
This chart shows that in midterm election years, the market often experiences a noticeable pullback during the year—but importantly, it has historically gone on to produce strong returns over the following 12 months. In simple terms, weakness during these periods has often been followed by recovery.

S&P 500 Earnings and Price Forecast (Source: Goldman Sachs Global Investment Research)
This chart compares where the market is today with where earnings are expected to go in the future. The takeaway is that if corporate earnings continue to grow as expected, there is a reasonable path for the market to move higher over time.

SPY Put Volume and Subsequent Market Performance (Source: Subu Trade)
This chart highlights periods when investors are heavily buying downside protection (puts), which typically reflects fear. Historically, when fear reaches these elevated levels, markets have often stabilized and moved higher afterward.

S&P 500 Returns by Presidential Cycle Year (Source: Bespoke Investment Group)
This chart shows that the second year of a presidential cycle has historically been the weakest for markets, while years three and four tend to be much stronger. In other words, the current phase has often been a softer period within a longer-term positive cycle.

Nasdaq Performance Following Extended Weekly Declines (Source: Bespoke Investment Group)
This chart shows that extended losing streaks in the Nasdaq are rare and have not tended to continue indefinitely. Historically, once markets reach these kinds of extremes, they have typically reversed and recovered.

While past performance is not predictive of future results, these patterns reinforce an important principle: periods of elevated fear have historically created opportunity for disciplined investors.

There are times when markets rise further than fundamentals justify, and there are times when declines extend beyond what is warranted. We believe the current environment is closer to the latter. That does not preclude additional volatility, but it does suggest that long-term investors should be cautious about making reactive decisions.

It is during periods like this that investors are most at risk of making decisions that can take years to recover from. Remaining patient, maintaining discipline, and staying aligned with a long-term strategy have consistently proven to be the most effective approach through market cycles.

As always, we are closely monitoring conditions and positioning portfolios with both risk management and long-term opportunity in mind. If you have any questions or would like to discuss your portfolio in more detail, please do not hesitate to reach out.

Past performance does not predict future results.

Sources: First Trust, Goldman Sachs Global Investment Research, Bespoke Investment Group, Subu Trade

Sincerely,

Kessler Investment Group, LLC

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

I am writing to share my thoughts on what I believe could prove to be a seminal moment for the Middle East and, potentially, for the global economy.

Iran has long acted as a primary agitator in a region that already contains many geopolitical tensions. While it is always important to avoid excessive optimism when discussing geopolitics, there are moments in history when seemingly entrenched situations change very quickly. The fall of the Berlin Wall in 1989 is one of the clearest examples. The Cold War appeared firmly in place right up until the moment it suddenly was not. In a matter of months, the geopolitical landscape of Europe and the world changed dramatically.

At the risk of sounding optimistic, it is worth considering whether something similar could occur in Iran should the current regime eventually be replaced by a more democratic republic. If such a transition were to occur, history suggests that the speed of change could rival the suddenness of the Berlin Wall’s fall. When the Soviet Union dissolved between 1989 and 1991, it ushered in a decade of economic expansion and rising asset prices across much of the world. During the 1990s, U.S. equities experienced one of the strongest bull markets in modern history, with the S&P 500 rising roughly fourfold between 1990 and 2000.

A similar geopolitical shift in the Middle East could carry meaningful economic implications. Reactions from several Gulf states—including the United Arab Emirates, Qatar, Saudi Arabia, Kuwait, and Bahrain—suggest growing frustration with Iran’s current regime. If regional powers ultimately align toward stabilizing the region following a potential political transition in Iran, it could lead to an unprecedented period of relative stability in a part of the world that has historically been defined by uncertainty.

The economic implications of such stability could be significant. The Middle East accounts for roughly one-third of global oil production and controls some of the most important shipping lanes in the world. Reduced geopolitical risk in the region could place downward pressure on energy prices over time and encourage greater international travel and commerce throughout the region.

Markets appear to be attempting to interpret these developments in real time. Earlier this week, following the onset of attacks, equity markets initially reacted with a relatively constructive tone. Investors appeared to believe that the operations were effective and that the conflict might be resolved relatively quickly. In many cases, markets tend to move ahead of political developments as they attempt to price in future outcomes.

However, as events have unfolded, oil prices have begun to move higher. Energy markets are particularly sensitive to disruptions in the Strait of Hormuz, a narrow shipping channel through which approximately 20% of the world’s petroleum supply passes each day. Rising oil prices have likely contributed to the recent pullback in equities, as higher energy costs can raise inflation expectations and place pressure on global growth.

In response to the increasing risks to shipping in the region, the United States has deployed additional naval assets. The USS George H.W. Bush carrier strike group is reportedly heading toward the Persian Gulf, where it will augment the two carrier groups already operating in the region. While this represents an escalation in terms of military assets deployed, it may ultimately serve to stabilize the situation by protecting shipping lanes and ensuring the continued flow of energy through the Strait of Hormuz.

If these deployments successfully secure oil transport and reduce the risk of disruption, oil prices may stabilize or retreat from recent spikes. Preventing oil from approaching levels near $100 per barrel would likely help ease inflation expectations. In turn, this could increase the probability that the Federal Reserve begins easing monetary policy later this year. Financial markets are extremely sensitive to interest rate expectations, and even modest shifts in policy outlook can have meaningful effects on asset prices.

Should energy prices moderate and monetary policy expectations improve, equity markets could respond positively in the near term. Looking further ahead, the longer-term implications of a structural political change in Iran could be even more significant. A more stable Middle East could encourage capital flows into global risk assets, including equities, real estate, and certain commodities, as geopolitical risk premiums decline.

As always, we remain focused on evaluating both the risks and opportunities that emerge from major global developments. While geopolitical events are inherently unpredictable, history reminds us that periods of major political change can sometimes create the foundation for extended economic expansion.

We will continue monitoring developments closely and will keep you informed as events unfold.

Sincerely,

Kessler Investment Group, LLC

Past performance does not predict future results.

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

The second week of February has historically been a bit slippery for the market, and this year is no exception. We saw a similar pattern last year as well. Seasonality doesn’t determine long-term outcomes, but it can help explain some of the short-term choppiness we’ve experienced recently.

It’s difficult to separate markets from current geopolitical events. As a Veteran, I have a very personal sensitivity to any conflict that involves U.S. servicemen and women. That will always come first for me. Setting that aside and looking strictly at markets, history does offer useful perspective.

Much of the recent weakness appears tied to the buildup to this moment. Markets tend to price in uncertainty ahead of events — not after. By the time military action formally begins, investors have often already adjusted expectations and reduced risk. Looking at prior instances when the United States entered hostilities — including Desert Storm, Afghanistan, Iraq, Libya, and others — the S&P 500 has, on average, been up roughly 3–4% one month after the onset of hostilities and approximately 4–5% six months later. In several cases the gains were significantly stronger, such as the period following the 2003 Iraq invasion and the start of Desert Storm. While every situation is different and past performance never guarantees future results, the pattern has often been one of stabilization — and sometimes recovery — once uncertainty shifts to clarity.

There is an old saying on Wall Street: “Sell the rumor, buy the news.” In environments like this, that dynamic can apply. Markets often weaken as uncertainty builds. Once events move from speculation to reality, some of that uncertainty is removed, and relief rallies are not uncommon.

Given that context, I believe there is a very real possibility we could see some stabilization — and potentially relief — following this military action. That doesn’t eliminate volatility, and broader factors like earnings, interest rates, and economic data still matter. But history suggests that reacting emotionally to geopolitical headlines has rarely served long-term investors well.

As always, we remain disciplined and focused on long-term outcomes rather than short-term noise.

Please don’t hesitate to reach out if you’d like to discuss further.

Sincerely,

Kessler Investment Group, LLC

Past performance does not predict future results.

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

While the S&P 500 Index is more or less flat on the year, the experience beneath the surface has been anything but calm. We have seen an elevated level of volatility as investors reposition portfolios and leadership rotates away from the “AI” cohort into other areas of the market unrelated to the new technology theme.

Periods like this often create the impression that a material decline is imminent. When volatility increases, the natural human tendency is to assume something is “wrong.” Yet history shows that short bursts of turbulence frequently reflect repositioning and sentiment shifts rather than structural deterioration.

Seasonality has also contributed to the unease. Historically, the final two weeks of February tend to trade lower. We witnessed a similar dynamic last year following the White House tariff announcement, which ultimately led to an approximate 20% decline in the S&P 500 — technically a bear market. Yet that decline proved temporary, and stocks recovered into solidly positive territory by year-end. The lesson: sharp corrections can occur within broader constructive cycles.

Today’s volatility is measurable. More than 20% of the individual stocks within the S&P 500 are either up or down by 20% or more this year, even as the index itself is only modestly lower. That dispersion speaks far more to portfolio rotation and capital reallocation than to systemic risk.

Some commentators are suggesting that the bull market that began in 2016 is nearing its end — the familiar refrain that “trees don’t grow to the sky.” A more applicable market adage is: “Bull markets don’t die of old age; they are murdered by the Fed.” At present, the Federal Reserve is signaling rate cuts ahead, not restrictive policy escalation. That distinction matters.

A meaningful portion of current volatility stems from the narrative that AI spending is creating a speculative bubble. We strongly disagree with that characterization. History provides perspective.

In December 1999, Style Weekly dismissed the internet as a fad and likened it to digging through a digital landfill. In February 1995, Newsweek published Clifford Stoll’s article, “Why the Web Won’t Be Nirvana.” In 1999, Barron’s questioned Amazon’s viability, citing lack of profits and heavy spending — concerns that were widely echoed at the time. Following Google’s August 19, 2004 IPO, Knowledge at Wharton, the official online research journal of the Wharton School at the University of Pennsylvania, highlighted skepticism around valuation and investor behavior, noting that Google reduced its offering price from an initial $108–$135 range to $85 per share due to weak demand. At the time, Google’s market capitalization was approximately $23 billion. Today, Alphabet’s market capitalization exceeds $2 trillion. Myopic skepticism to say the least.

Innovation cycles are often accompanied by skepticism, volatility, and misplaced certainty. The early stages of transformative technologies rarely look orderly. They look noisy.

The Stock Trader’s Almanac recently outlined why a 50% gain in the Dow could be possible from a 2026 low to a 2027 high, noting that major corrections frequently occur in the first or second year following presidential elections. In the last 16 midterm election years, bear markets began or were in progress 10 times. Yet there were bull years in 1986, 2006, 2010, and 2014, while 1994 was flat. The 2018 correction ended abruptly on Christmas Eve. Election cycles often produce volatility — but not necessarily prolonged structural damage.

From our vantage point, the worst of the correction that began in late 2025 appears to be nearing its end. Earnings remain solid. The anticipated Fed rate cuts should provide incremental support. The repositioning that has driven much of the recent volatility appears largely complete.

We have witnessed a selloff in the software sector and a rotation out of the “Mag 7,” the largest global companies that had previously led performance. Importantly, the criticism of the broader market has been more optical than fundamentally based. When volatility is driven by emotion rather than earnings deterioration or liquidity stress, it tends to be temporary.

Emotion has never been a sound basis for investment decisions. Discipline, valuation, liquidity conditions, and earnings power matter far more than headlines.

We remain constructive, selective, and focused on long-term capital appreciation. Periods like this test conviction — but they also create opportunity.

As always, we appreciate your trust.

Sincerely,

Craig Kessler
Kessler Investment Group, LLC

Past performance does not predict future results.

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

The market selloff we are experiencing will pass.

Periods like this are often driven by a convergence of short-term factors rather than a deterioration in underlying fundamentals. In this case, recent pressure has been influenced by developments in the Japanese bond market, the President’s announcement regarding his Federal Reserve Chair nominee, and heightened volatility in precious metals. While these issues have contributed to near-term uncertainty, they do not alter the broader economic backdrop.

Importantly, inflation, growth, and productivity data continue to come in stronger than expected. These fundamentals remain supportive of long-term equity values.

It is also worth recalling that just last year the market endured a roughly 20% bear market beginning in February, only to recover meaningfully and finish the year on a much stronger footing. While past performance does not predict future results, history reminds us that sharp corrections, while uncomfortable, are a normal feature of investing and often create opportunity.

At present, we see no structural issues that would suggest the likelihood of a prolonged bear market. That said, prudence matters. We have reduced equity exposure in portfolios—even though we continue to like many of the individual companies we own—in order to manage risk and preserve flexibility.

As prices come down, we are beginning to see unique opportunities emerge. Maintaining liquidity allows us to be patient, selective, and prepared to deploy capital when risk-reward dynamics become especially attractive.

As always, our focus remains on protecting capital, navigating volatility thoughtfully, and positioning portfolios for long-term success. We appreciate your continued trust and confidence.

Sincerely,

Kessler Investment Group, LLC

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

From a fundamental standpoint, the backdrop remains constructive. Corporate earnings are solid, companies are holding historically high levels of cash, and household balance sheets are in strong shape, with average household debt near its lowest level in more than 30 years. These conditions are very different from those that typically precede sustained economic or market stress.

Investor sentiment, however, has turned sharply negative. Short interest—positions that profit if markets fall—is near historic highs. Periods when pessimism becomes this widespread have often created the conditions for markets to move higher once uncertainty begins to clear. Markets have a long history of advancing in ways that surprise investors who are positioned too defensively.

The policy environment is also important. The Federal Reserve remains supportive of economic growth, and additional interest rate cuts are still possible this year. Lower rates tend to be a tailwind for both economic activity and financial markets over time.

On the political front, President Trump has consistently favored a negotiating style that begins with aggressive rhetoric or opening positions before shifting toward compromise. Markets have seen this pattern before. As election dynamics move closer into focus, there is also a strong incentive for policymakers to emphasize growth-oriented and market-friendly actions rather than policies that could undermine economic confidence.

Volatility and short-term pullbacks are a normal part of investing and should be expected, especially in environments shaped by uncertainty and heavy headline flow. While “air pockets” are likely from time to time, the underlying foundation of the market remains sound. Staying disciplined, diversified, and focused on long-term objectives continues to be the most effective way to navigate periods like this.

As always, we are monitoring conditions closely and will adjust as warranted.

Sincerely,

Kessler Investment Group, LLC

Past performance does not predict future results.

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

Markets often send mixed signals near the middle-to-late stages of long cycles and today is no exception. On the surface, we are seeing what appears to be a contradiction: record capital inflows into US equities occurring alongside rising layoff announcements and a modest uptick in unemployment. Historically, that combination makes investors understandably uneasy.

However, history suggests that this dynamic is not unusual during ongoing bull markets, particularly those driven by productivity and innovation rather than broad labor expansion.

Capital Flows and the Role of Monetary Policy

During 2025, a substantial amount of capital has flowed into US equities, particularly large-cap index vehicles. At the same time, job cuts have accelerated, pushing the unemployment rate higher. In past cycles, rising unemployment has often preceded recessions, and some of the most severe equity drawdowns have occurred during periods when labor conditions deteriorated.

That history deserves respect—but it also requires context.

When economic momentum softens and labor markets begin to loosen, central banks typically respond by easing monetary policy. Lower interest rates reduce the attractiveness of holding cash and increase the relative appeal of assets such as equities, real estate, and alternative investments. This dynamic often extends bull markets rather than ending them, even as economic data weakens at the margins.

This is precisely what occurred in the mid-to-late 1990s and again in the final stages of the 2003–2007 expansion. In both cases, equity markets continued to rise after early labor-market cracks appeared—until monetary policy eventually reversed course.

The unemployment we are currently seeing is better characterized as a period of pruning rather than one driven by structural shifts or weakened demand. Following the unprecedented hiring surge in the aftermath of COVID, it is natural for firms that overexpanded their workforces to now reduce headcount.

Why Today Is Not 2008

At first glance, the combination of high valuations, strong inflows, and rising unemployment invites comparisons to 2007–2008. But we believe the closer historical parallel is the late 1990s, not the Global Financial Crisis.

The defining difference lies in earnings and productivity.

Despite rising unemployment, corporate earnings—particularly in technology and innovation-driven sectors—are not only growing, but they are also accelerating. Investments in automation, artificial intelligence, and efficiency-enhancing technologies are allowing companies to grow output without proportional increases in labor. In other words, job losses today are not primarily demand-driven; they are productivity-driven.

This distinction matters. In 2008, earnings collapsed because the financial system itself was impaired. Today, earnings growth remains intact, concentrated in sectors that are reshaping how economic value is created. That allows markets to remain resilient even as labor-market headlines weaken.

Valuations: A Long-Term Constraint, not a Short-Term Trigger

It is true that equity valuations are elevated by historical standards, and history clearly shows that buying markets at high valuations tends to reduce returns over the next decade. That reality informs our long-term planning and reinforces the importance of selectivity.

However, valuations are a poor timing tool in the short run. Markets can—and often do—continue to rise from expensive levels, particularly when monetary policy is accommodative and earnings growth remains strong. High valuations tell us more about what future returns may look like years from now than where markets will go over the next several quarters.

This is why we believe the current environment favors active management and leadership selection, rather than broad, valuation-agnostic exposure.

Gold and Silver: Understanding the Recent Moves

Recent strength in gold and silver has attracted considerable attention, and while these moves are noteworthy, they are best understood within a longer historical and monetary context.

Over time, gold prices tend to align with inflation. However, there are periods—such as the one we are experiencing now—when gold moves well ahead of inflation. These episodes are typically driven by fiscal imbalances and growing government deficits, which push investors toward gold as a hedge against currency debasement rather than near-term price increases.

History shows that this phase does not persist indefinitely. As governments increase money creation to service and refinance debt, inflationary pressures eventually reassert themselves. At that point, central banks are forced to respond by raising interest rates to restore confidence in the currency and contain inflation. As markets digest the expanded money supply and higher borrowing costs, economic growth slows and attention shifts away from gold toward assets that benefit from a stronger currency and higher real yields, such as bonds and other defensive income-oriented investments. In prior cycles, this transition has marked the point at which gold’s leadership fades.

The silver market, however, is structurally different from gold. Silver is a much smaller market and is far more sensitive to supply dynamics and the imbalance between physical availability and paper claims. While silver does have important industrial uses, including electric vehicles, solar panels, and other technologies—this is not a new development, nor is it a surprise to investors.

Speculative interest in silver has historically surged during periods when industrial demand narratives gain traction. At the same time, commodity exchanges have a long track record of raising margin requirements to curb excessive speculation. These actions have frequently led to sharp and rapid declines in silver prices as leveraged positions are unwound.

Like many of our clients, I recall the period when the Hunt Brothers of Texas attempted to corner the silver market. That episode ended with a dramatic collapse in prices—an event now referred to as “Silver Thursday” in 1979—the last time silver traded above $70 per ounce. While today’s circumstances are different, the lesson remains relevant: silver’s price history is marked by volatility amplified by speculation, and periods of extreme price appreciation have often been followed by equally dramatic reversals.

Rotation Beneath the Surface

As discussed previously, gold and silver have performed well as early beneficiaries of monetary and fiscal imbalances. While precious metals may still have room to run, history suggests they are rarely the final winners in this type of environment.

As confidence stabilizes and capital spending expands, leadership tends to rotate toward:

• Raw materials and basic metals, which benefit from infrastructure, energy transition, and manufacturing investment
• Companies exhibiting genuine productivity gains, strong margins, and scalable growth models

This rotation reflects an economy that is adapting rather than contracting, another reason we expect risk assets to remain supported in the near to intermediate term.

Looking Further Ahead: The Inevitable Reckoning

While the current period remains fertile for opportunity, cycles do not end quietly—and they do not last forever.
Looking five to seven years ahead, we see a convergence of forces that historically marks the transition toward more stagnant market conditions:

• Valuations are likely to become increasingly stretched
• Demographics will shift as the youngest baby boomers enter mandatory IRA distribution years, turning a large cohort from net buyers into structural sellers
• Government debt levels may reignite inflation concerns, eventually forcing tighter monetary policy
• Corporate debt refinanced during the low-rate era will need to roll forward at higher rates, pressuring weaker balance sheets

These forces are not imminent threats—but they are visible, measurable, and cumulative. Their alignment is consistent with our expectation that the market will gradually transition toward a more challenging phase in the early 2030s.

The Bottom Line

Periods like this reward nuance. Rising unemployment does not automatically signal the end of a bull market—particularly when earnings growth is driven by productivity and innovation, and monetary policy remains supportive. At the same time, elevated valuations and structural imbalances argue against complacency.

Our approach remains grounded in participating in where opportunity exists today, while preparing portfolios for a future environment where discipline, selectivity, and risk management will matter far more than momentum.

History suggests that the most successful investors are not those who call the end too early—but those who recognize when leadership is shifting and adapt before the cycle turns.

Our View for 2026: A Year of Rotation, Not Reversal

Looking ahead to 2026, we expect the Federal Reserve to continue cutting interest rates, a backdrop that has historically been supportive of equity prices. As short-term rates decline, we believe a meaningful amount of capital currently parked in cash—earning attractive real yields over the past several years—will gradually rotate back into risk assets.

We do expect market leadership to change. Stocks that dominated returns in 2025 are unlikely to lead again in the same way. Instead, we see opportunities shifting toward more economically sensitive sectors, particularly:

• Financials
• Industrials
• Materials
• Health Care

Technology will remain an important portfolio component, but our emphasis is shifting away from the broad technology trade toward areas more closely tied to economic activity and capital investment—most notably semiconductors, which sit at the intersection of innovation and real-world demand.

Because 2026 is a midterm election year, investors should expect some volatility. It would not be surprising to see pauses or corrections as markets digest political uncertainty and investors reposition ahead of the election. Historically, these episodes have tended to be temporary and tactical, rather than signals of lasting damage to equity markets.

We also expect policy actions aimed at supporting economic growth and market confidence. Measures such as tariff adjustments or direct fiscal support could emerge as tools to influence economic sentiment and voter behavior. While the specifics are unpredictable, the general incentive structure favors growth-oriented policies.

Overall, we view the underpinnings of the economy as solid. As rates fall and liquidity improves, stocks should continue to benefit from incremental inflows—particularly into areas aligned with productivity, capital spending, and economic momentum.

Sincerely,

Kessler Investment Group, LLC

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

Periods of market volatility have a way of stirring emotions—even for those of us who have spent decades navigating them. Recently, we’ve witnessed what we see as a shift in leadership among stocks. Many of the companies that powered markets higher over the past year are taking a breather, and in some cases, experiencing meaningful pullbacks. While this can feel uncomfortable, it is to be expected by investors.

I want to take a moment to frame what is happening and, more importantly, to reiterate what truly matters for long-term investors like us.

A Change in Leadership—Not a Collapse

Some commentators are quick to suggest that the artificial intelligence boom is over or that the so-called “AI bubble” is bursting. We believe these claims are premature. What we are seeing today looks far more like a rotation in leadership—not the unraveling of a transformational trend.

History is full of examples where early skeptics declared revolutionary technologies “finished” long before their impact fully materialized. In the mid-1990s, respected voices questioned whether the Internet was a passing fad. Even Robert Metcalfe, one of the architects of the Internet, in 1995, famously predicted its imminent collapse. Others, such as Nobel Prize-winning economist Paul Krugman, in 1998, dramatically underestimated the Internet’s economic potential by comparing it to that of the fax machine.

We now know how that story turned out.

AI sits at a similar early-stage point in its development. The companies driving today’s innovations are far better capitalized, far more profitable, and far more strategically positioned than many of the dot-com firms of the 1990s. Comparing the two eras misses key differences—particularly in financial strength, real-world adoption, and the massive corporate investment underway.

This is not the end of a trend. We believe it is the beginning of a long runway.

Periods of Market Turbulence Are Unsettling—But Common

Even experienced investors feel a knot in their stomach during sharp pullbacks. But the data reminds us how normal these moves can be.

Since 1928, the S&P 500 has averaged:

• 1% daily drops: 50–60 times per year
• 3% declines: 7–8 times per year
• 5% pullbacks: 3–4 times per year
• 10% corrections: about once every 1.1 years
• 20% bear markets: approximately every 3.5 years

These figures are historical averages. Past performance does not predict future results.

Pullbacks are not only common—they are expected. Many times, they are the “air pockets” the market encounters on the path toward long-term growth.

Peter Lynch, the former head of Fidelity’s Magellan Fund, famously said, “Far more money has been lost by investors trying to anticipate corrections than has been lost in all the corrections combined.”

Perspective Is the Investor’s Most Valuable Tool

Short-term price movements can be noisy. But long-term trends—such as AI—are shaped by underlying economic and technological forces that do not reverse overnight. We believe we remain in the early chapters of what could be a multi-year, even multi-decade, period of innovation and productivity gains.

Yes, there will be volatility. Yes, there will be rotations in leadership—sometimes sudden and uncomfortable. But none of this undermines the broader opportunity we see ahead.

Our role is to look through the short-term turbulence, avoid emotional decision-making, and stay focused on the data, the fundamentals, and the long-term goals we’ve built together.

Looking Ahead

We fully expect that true “bubble-like” conditions may emerge someday as enthusiasm reaches a peak—but not now. In our view, that period remains years away. What we see today is simply part of the natural rhythm of markets: leaders resting, new sectors strengthening, and investors sifting through opportunity.

We remain committed to guiding you through these moments with perspective, discipline, and a long-term focus.

As always, if you have questions or would like to discuss your portfolio, please reach out. We are here for you.

Warm regards,

Kessler Investment Group, LLC

All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.

Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.