Over the years, our investment letters have provided an opportunity to share our perspectives on the financial markets, economic developments, and the investment principles that guide our decisions.

We’re now adding another way to keep you informed.

I’m pleased to introduce KIG Market Commentary, a series of short videos designed to provide timely insights into the markets and a closer look at the thinking behind our investment strategies.

The series will feature three formats:

• Market Perspective — A broader examination of market trends, valuations, economic conditions, and long-term investment opportunities.
• The Market in Five Minutes — Concise commentary on important developments and what they mean for our investment outlook.
• Chart of the Week — A closer look at compelling market and economic data that often tell a different story from the headlines.

For our inaugural episode, I’ll introduce these three formats and then discuss several developments shaping our outlook, including the Federal Reserve’s changing approach to communicating with investors, the continuing influence of artificial intelligence, the upcoming midterm elections, and why we remain constructive on the prospects for equities.

Click here for: KIG Market Commentary

These videos are intended as an extension of the conversations we’ve shared with you over the years. They won’t replace our investment letters, but will allow us to communicate more frequently and provide additional context for our investment decisions.

As always, thank you for the confidence and trust you’ve placed in us.

Craig Kessler
Kessler Investment Group, LLC

Sincerely,

Kessler Investment Group, LLC

Over the past several weeks, technology stocks have experienced considerable volatility as investors have begun questioning the sustainability of the enormous investments being made in artificial intelligence. Some of the companies most closely associated with AI have experienced sharp declines, even as their underlying businesses continue to report strong earnings and substantial demand for their products and services.

For many investors, this volatility is unsettling. For me, it is also familiar.

I have been investing through major technological changes for more than three decades, including the extraordinary development of the internet during the 1990s. That experience has shaped how I evaluate today’s artificial intelligence revolution. I believe AI represents one of the most consequential technological developments of our lifetimes, and I expect the companies that successfully develop, enable, and commercialize this technology to create substantial long-term wealth for shareholders.

But I also believe the road to those returns will be anything but smooth.

One of the most important lessons I learned during the 1990s is that a company can be participating in an extraordinary technological revolution while its stock experiences periods of disappointing—even terrible—performance.

Consider what happened during the internet revolution.

Microsoft was already becoming one of the world’s most important technology companies, yet its stock declined approximately 6% in 1993. Oracle, whose database technology became essential to the expanding digital economy, lost approximately 66% of its value in 1990 and experienced another decline of roughly 20% in 1997. Adobe declined approximately 52% in 1992 and another 40% in 1996.

These were not insignificant companies operating on the fringes of a speculative industry. They were businesses developing products and services that would become foundational to the modern economy.

Their stocks nevertheless experienced substantial periods of underperformance.

Apple provides another remarkable example. Its stock declined approximately 18% in 1995, 35% in 1996, and 37% in 1997. Those three consecutive negative years resulted in a cumulative loss of roughly two-thirds of its market value. Investors who looked only at the stock’s performance could reasonably have questioned whether the company had a future.

Yet Apple subsequently appreciated approximately 212% in 1998 and another 151% in 1999.

Of course, Apple’s eventual success was not inevitable. The company faced genuine business difficulties and needed substantial changes to restore its competitive position. But that is precisely the point: investors must distinguish between temporary changes in market sentiment and lasting changes in a company’s economic prospects.

Perhaps the most instructive example is Amazon.

Amazon’s stock appreciated approximately 966% in 1998 as enthusiasm for the internet reached extraordinary levels. Yet in 2000, its shares declined approximately 80%, followed by another 30% decline in 2001. From its peak in 1999 to its low in 2001, Amazon lost more than 90% of its market value.

Imagine being an investor in Amazon during that period. The internet was still growing. More consumers were shopping online. The company’s business was expanding. Yet its stock price suggested that investors had dramatically reduced their expectations for the future.

Amazon eventually became one of the most successful businesses in history.

I often think about the distinction Benjamin Graham made between the market as a voting machine in the short run and a weighing machine in the long run. Amazon’s experience illustrates that principle exceptionally well. In the short term, investors voted overwhelmingly against the company’s stock. Over the long term, the market eventually recognized the enormous economic value the business was creating.

This is not to suggest that every internet company ultimately succeeded. Far from it. Many disappeared, and others never recovered the valuations they achieved during the speculative excesses of the late 1990s. Cisco, for example, remained an important technology company, but investors who purchased its shares at the height of the internet bubble endured an extraordinarily difficult experience.

The lesson I took from that period was not simply to buy technology stocks and hold them regardless of circumstances. It was to identify businesses with durable competitive advantages, substantial opportunities for growth, strong financial characteristics, and valuations that offered reasonable prospects for attractive long-term returns.

I believe those same principles apply directly to artificial intelligence today.

We are witnessing enormous investments in semiconductor manufacturing, data centers, electrical infrastructure, networking equipment, software, and computing capabilities. These investments are creating the infrastructure upon which future AI applications will operate.

Just as the internet required years of investment in telecommunications networks, servers, software, and computing equipment before many of its most valuable commercial applications emerged, artificial intelligence is requiring an extraordinary infrastructure build-out before its full economic potential can be realized.

And just as happened during the 1990s, I expect investors to periodically become too enthusiastic about the opportunities and then too pessimistic about the challenges.

There will be periods when AI-related stocks appreciate faster than their underlying earnings can reasonably justify. There will also be periods when those same stocks decline substantially despite continued growth in their businesses.

We are seeing some of that today.

Recent weakness in technology stocks has been particularly pronounced, even as other sectors of the market have demonstrated considerable strength. During the week ended October 16, the technology sector declined approximately 7.7%, while seven of the eleven major S&P 500 sectors actually advanced. Healthcare, energy, materials, and consumer staples all recorded meaningful gains.

That is an important distinction. The broader economy and stock market are not necessarily deteriorating simply because investors are reassessing the valuations of technology companies.

At the same time, we should not dismiss the legitimate concerns surrounding AI. The amounts of capital being committed are enormous, and investors are increasingly asking whether those expenditures will generate adequate financial returns. That is an appropriate question, and one we take seriously.

We also recognize that elevated interest rates, persistent inflation, and energy prices can create additional challenges for equity valuations. None of these risks disappears simply because we are enthusiastic about a technology’s future.

Nevertheless, my experience during the internet revolution gives me considerable confidence in the importance of maintaining a long-term perspective.

I do not believe the greatest investment opportunities in artificial intelligence will necessarily come from purchasing whichever stocks are attracting the most attention. They will come from identifying companies that can convert technological innovation into sustainable earnings, cash flow, and attractive returns on invested capital.

Some of those companies will provide the physical infrastructure supporting AI. Others will develop software and services that enable businesses to operate more productively. Still others may emerge in industries such as healthcare, manufacturing, logistics, and energy, where the application of AI could fundamentally improve the economics of existing businesses.

Importantly, we should expect the eventual winners to change as the technology develops. Some companies that appear dominant today may disappoint, while others that receive relatively little attention may become extraordinarily successful.

This is why our investment process remains grounded in fundamental analysis, valuation discipline, and diversification rather than enthusiasm for any particular technology.

I remain optimistic about the stock market through the remainder of this year and into 2027, although I expect periods of volatility along the way. More importantly, I am optimistic about the longer-term investment opportunities being created by artificial intelligence.

I believe a carefully selected portfolio of financially strong AI-related businesses, purchased at reasonable valuations and held with patience, has the potential to generate substantial long-term returns.

That conviction comes not from assuming that history will repeat itself, but from having experienced firsthand how markets respond to transformative technologies.

During the 1990s, investors repeatedly confused temporary stock-price declines with the failure of the internet’s long-term economic promise. Others made the opposite mistake, assuming that because the internet would change the world, any price paid for an internet-related stock was justified.

Both mistakes proved costly.

Our objective is to avoid them.

We do not need every company to succeed, nor do we need every investment to outperform the market every year. In fact, history demonstrates that even successful long-term investment strategies can experience extended periods of relative underperformance.

What matters is that the businesses we own continue building economic value and that we remain disciplined about the prices we pay for that value.

The internet revolution rewarded investors who correctly identified enduring businesses and had the patience to withstand difficult periods. I believe artificial intelligence will create similar opportunities, although the specific winners and the magnitude of their returns remain uncertain.

My experience through the technology cycles of the past three decades informs both my optimism and my caution. I have seen extraordinary innovation create extraordinary wealth. I have also seen excellent companies become poor investments when purchased at excessive valuations.

That experience is one of the most important things I bring to managing your investments today.

I expect the AI revolution to create meaningful long-term investment opportunities. I also expect the journey to include corrections, disappointments, and periods when patience is tested. Our responsibility is to remain focused on the long-term economic value being created rather than allowing short-term market fluctuations to dictate our decisions.

Thank you for the confidence you place in Kessler Investment Group. We take that responsibility seriously and remain committed to building and preserving your wealth through disciplined, long-term investing.

Sincerely,

Kessler Investment Group, LLC

Historical stock returns are approximate, reflect the periods discussed, and are not guarantees of future results. Individual securities and investment strategies involve risk, including possible loss of principal. The outlook expressed represents current expectations and may change as economic and market conditions evolve.

I believe stocks will finish the year higher, with the S&P 500 advancing and the Magnificent Seven positioned for renewed gains after a volatile year. October could be choppy as the midterm election approaches, but I expect it to be positive overall, followed by a stronger finish as election uncertainty recedes.

The foundation of that outlook is earnings. FactSet’s September 25 report puts expected third-quarter S&P 500 earnings growth at 29.1%, up from 26.7% at the end of June. Those are estimates, but their upward revision is encouraging. I believe the coming earnings season can deliver further upside surprises, while stabilizing oil prices and easing inflation concerns improve investor confidence.

Higher interest rates and a stronger dollar can pressure profits and valuations, but earnings growth despite those pressures signals economic resilience. I believe that strength can support higher stock prices. The rate chart (Figure 1) shows positive average returns following both Fed hikes and cuts: 14.9% and 11.2%, respectively, over the next year. Higher rates have not automatically prevented gains, although these averages do not establish cause and effect.

The charts also provide three useful seasonal perspectives. First, when the S&P 500 entered October up between 10% and 20%, it finished the fourth quarter higher in 18 of 21 completed observations, or 85.7% of the time, averaging a 5.3% gain (Figure 2). Second, October has historically been the strongest month of midterm years in the supplied monthly chart (Figure 3), averaging roughly 3%, with November also strong. October can be volatile and still finish higher.

Third, the presidential-cycle chart (Figure 4) shows the historical improvement from late in the midterm year into the following year. Carson Investment Research’s separate quarterly analysis makes the point more precisely: the fourth quarter of a midterm year and the first two quarters of the following year have historically been the three best-performing quarters for the S&P 500, by average return, out of all 16 quarters in the four-year presidential cycle. Those periods correspond to Q4 2026, Q1 2027 and Q2 2027. This supports an outlook extending beyond year-end.

I expect the Magnificent Seven—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla—to contribute to the advance as earnings and business outlooks support renewed confidence. Their results will differ, and profits must still justify valuations.

Past performance does not predict future results. Renewed inflation, an oil-price spike, higher borrowing costs, dollar pressure on overseas earnings, geopolitical shocks or disappointing profits could lead stocks lower. Even with those risks, I believe the balance favors higher prices into year-end and a constructive start to 2027.

Thank you for your continued trust.

Craig Kessler
Chief Investment Officer

Views as of October 1, 2026 and subject to change. Investing involves risk, including loss of principal. Past performance does not predict future results.

Stocks Following Fed Rate Changes
Figure 1  |  Average forward total returns following hikes and cuts

What the comparison tells us

The supplied chart reports positive average returns after both rate hikes and rate cuts, including one-year averages of 14.9% and 11.2%, respectively. It supports the narrower point that higher policy rates need not prevent stock gains. It does not show that rate hikes cause gains or that stocks will rise over the coming quarter.
Source: Charlie Bilello / Creative Planning, using YCharts and Federal Reserve data, October 1982–September 2026. The chart does not disclose sample counts, event overlap or treatment of incomplete forward-return windows. Returns beyond one year are cumulative as presented, not annualized. This chart does not test the effect of a stronger dollar.

Earnings source

FactSet Earnings Insight, September 25, 2026, page 1. Estimated Q3 2026 year-over-year S&P 500 earnings growth of 29.1%, versus 26.7% estimated June 30. https://www.factset.com/earningsinsight

Presidential cycle source

Carson Group, Here Comes the Best Month in a Midterm Year, September 29, 2026. Identifies midterm-year Q4 and pre-election-year Q1 and Q2 as the three best quarters of the four-year cycle. https://www.carsongroup.com/insights/blog/here-comes-the-best-month-in-a-midterm-year/

Charts are reproduced as supplied, with source attribution retained. Historical averages describe the source samples and are not probabilities or return targets for this quarter. The seasonal and rate charts do not provide company-specific evidence for a Magnificent Seven rebound.

Historical Fourth Quarter Returns
Figure 2  |  Fourth quarters following a 10% to 20% gain through September

Source: Carson Investment Research / FactSet, supplied chart dated September 27, 2026. The 2026 row is preliminary and explicitly notes two trading days remaining; it is not the final September return. The historical statistics cover 21 completed observations. The second supplied version repeats this history with a different preliminary 2026 figure and is omitted.

Seasonality Around Midterm Elections
Figure 3  |  Average monthly returns across historical samples

Source: Carson Investment Research / YCharts, May 29, 2026; returns for 1950–2025. Midterm-year October returns average roughly 3% in the chart. A positive monthly average does not rule out sharp swings within the month.

The Four Year Presidential Cycle
Figure 4  |  Historical seasonal composite

Source: Nautilus Investment Research / FactSet, April 15, 2026; 99-year composite. The historical pattern strengthens late in the midterm year and into the pre-election year. The red overlay is dated April 15 and is not current. The ranking of Q4 midterm, Q1 pre-election and Q2 pre-election as the three strongest quarters comes from Carson’s separate quarterly analysis, cited on page 2; the composite itself does not rank quarters.

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.

Financial markets have encountered some turbulence as investors adjust to a new Federal Reserve chairman and a different approach to monetary policy. New Fed chairs are often “tested” by the markets soon after taking office, and this transition appears to be no exception.

The market reacted negatively after the Federal Reserve left short-term interest rates unchanged while firmly restating its commitment to returning inflation to 2%. Much of the criticism since then has focused on the chairman’s communication style and his decision to move away from the forward guidance investors had grown accustomed to receiving.

We view this as less of a policy failure and more like two new dancing partners trying to determine who is leading.

The chairman has deliberately reduced the Fed’s guidance about what it might do next. That makes the market’s job more difficult in the short run because investors can no longer rely as heavily on carefully choreographed signals from the Fed. Change is uncomfortable, particularly when the old system was familiar and relatively easy to interpret. But discomfort alone does not make the new approach unproductive. Its success will ultimately be judged by results—not by the initial reaction of market commentators.

Interest Rates and the Fed’s Next Move

The market currently expects the possibility of higher short-term rates in September. That does not necessarily mean mortgage, automobile, and other consumer borrowing rates must rise by the same amount.

The Fed directly controls a very short-term interest rate. Longer-term borrowing costs are also influenced by inflation expectations, economic growth, Treasury yields, and credit conditions. If the Fed convinces investors that inflation will continue to moderate, longer-term borrowing rates could eventually decline even if the Fed raises its short-term rate. That outcome is possible, but it is not automatic.

It is also possible that the Fed will leave its policy rate unchanged while adjusting its balance sheet or using other tools to influence financial conditions.

Fortunately, our job is to navigate policy—not to set it.

Doing that well requires us to consider both the decisions the Fed may make and the range of economic outcomes that could follow. One of the most important parts of that analysis today is productivity.

Productivity Changes the Inflation Equation

Productivity simply means producing more with the same amount of labor, time, and resources. When productivity rises, businesses can grow without creating the same degree of inflationary pressure that would normally accompany faster economic activity.

This distinction matters. If lower interest rates stimulate demand without increasing the economy’s productive capacity, inflation can return. But if economic growth is accompanied by stronger productivity, the economy may be able to expand while inflation continues to moderate.

Artificial intelligence could become a powerful driver of that productivity.

The Fed chairman has repeatedly discussed the relationship among business investment, artificial intelligence, productivity, growth, and inflation. We believe he is paying close attention to whether AI allows supply to grow alongside demand. If it does, the traditional assumption that strong growth and low unemployment must produce higher inflation may prove too simplistic.

There is still a risk that the Fed raises rates too aggressively. Tightening policy during a period of moderating inflation, low unemployment, and economic growth could unnecessarily weaken the economy and eventually increase unemployment. The Fed must balance that risk against its responsibility to restore price stability.

The Cost—and Promise—of Building AI

The enormous investment required to build AI infrastructure has created a short-term challenge for several of the market’s largest companies. Google, Microsoft, Meta, Amazon, and other “hyperscalers” are spending heavily on data centers, chips, energy, and computing capacity.

That spending has reduced free cash flow and, at times, weighed on investment performance. The market naturally wants evidence that these investments will produce an attractive return.

We believe this should be viewed as an investment cycle rather than simply an expense problem. The infrastructure must be built before its full economic benefits can emerge. There will undoubtedly be winners, losers, delays, and periods of disappointment. Nevertheless, we believe AI-related growth and productivity gains may ultimately exceed those produced by the early internet.

Bespoke Investment Group compared the Nasdaq’s performance following the November 2022 launch of ChatGPT with its performance following the December 1994 release of the Netscape web browser. The similarity during the early stages is striking.

No chart can tell us exactly what happens next, and correlation should never be mistaken for certainty. The comparison is valuable because it illustrates how markets can respond when a genuinely important technology begins changing the economy. It does not mean that AI must follow the internet’s exact path—including the internet bubble and its eventual collapse.

Are Market Highs a Reason to Wait?

Investing when the market is near an all-time high can feel uncomfortable. Investors naturally worry that they are buying at “the top” immediately before a decline.

History does not support that assumption.

Since 1989, the S&P 500’s average forward total return after reaching a new high has been slightly better than its return during all other periods. Its average one-year return following a new high was 13.6%, compared with 12.0% at other times. The same pattern appears over three- and five-year periods.

A market high is not, by itself, evidence that a decline is imminent. Markets reach new highs because businesses grow, earnings increase, and the economy expands. Over long periods, new highs are a normal feature of successful investing.

Time also changes the odds dramatically. Since 1928, the S&P 500 has produced a positive return during only 53% of individual trading days. Over one-year periods, that figure rises to 75%, and over ten-year periods it reaches 94%. The lesson is straightforward: investing is much less dependent on short-term market movements when investors give their capital sufficient time to work.

Earnings and Household Finances Remain Supportive

Stock prices have risen this year, but projected corporate earnings have grown even faster. That does not mean the market is inexpensive, nor does it guarantee that prices will continue higher. It does mean, however, that the advance has been supported by improving business fundamentals rather than price appreciation alone.

Over the long run, earnings remain the primary engine of stock prices.

Household finances also appear stronger than the popular narrative suggests. Americans carry more debt in absolute dollars than they did in previous decades, but that comparison ignores the growth of income and household assets.

Household liabilities are now approximately 10.8% of total assets—near levels last seen in the early 1960s and well below the approximately 20% reached around the financial crisis. Leverage is also below its historical peak across every income group.

This does not mean that every household is financially comfortable. Many families continue to face real pressure from housing, food, insurance, and borrowing costs. At the economy-wide level, however, household balance sheets do not presently resemble those that preceded the 2008 financial crisis. The consumer’s “financial battery” still appears to have a meaningful charge.

A Historically Favorable Stretch

The presidential market cycle provides one additional point of support. Since 1950, the fourth quarter of a president’s second year and the first two quarters of the third year have historically been the strongest three-quarter stretch of the cycle.

Several explanations have been offered for this pattern, including the resolution of uncertainty surrounding midterm elections and the political incentives to support economic activity as the next presidential campaign approaches.

History is useful context, but it is not a forecast. Elections, policy decisions, inflation, interest rates, geopolitical events, and corporate earnings can always cause a particular cycle to depart from the historical average.

Our View

We do not believe the recent volatility signals something fatal for the bull market. It looks more like a period of adjustment as the Fed and financial markets establish a new relationship.

The environment is not without risk. Inflation remains above the Fed’s goal, AI investment is consuming enormous amounts of capital, valuations in parts of the market are elevated, and the Fed could make a policy mistake.

At the same time, several important foundations remain constructive:

• Corporate earnings are growing faster than stock prices.
• Household leverage is low relative to assets and historical levels.
• Artificial intelligence is supporting a major investment and productivity cycle.
• Market highs have historically been followed by attractive long-term returns.
• The strongest portion of the historical presidential market cycle lies directly ahead.

None of these factors guarantees a smooth advance. Bull markets include pullbacks, corrections, and uncomfortable headlines. Volatility is the price investors pay for the superior long-term return potential of stocks.

Our responsibility is not to predict every market fluctuation or react to every press conference. It is to weigh the evidence, manage risk, and keep client portfolios positioned for the opportunities we believe lie ahead.

We remain watchful, but we also remain constructive.

Sincerely,

Kessler Investment Group, LLC

The S&P 500 and Nasdaq Composite are unmanaged indexes and cannot be invested in directly. Past performance does not guarantee future results. The views expressed reflect Kessler Investment Group’s assessment at the time of publication and may change as economic and market conditions evolve.

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.

Past performance does not predict future results.

Over the last few weeks I’ve received several calls asking essentially the same question:

“Has something changed?”

After the powerful rally that began in early April, many investors have been surprised by the sudden increase in volatility. Technology stocks that seemed unstoppable a few weeks ago are suddenly falling 3%, 5%, or even 10% in a matter of days. Semiconductor stocks have experienced some of their largest one-day declines in years. The highly anticipated SpaceX IPO has already seen significant volatility. Headlines have become increasingly negative.

My answer remains the same.

No, I don’t believe the primary story has changed.

What I believe has changed is that the market is doing what markets have always done after a powerful advance: it is pausing, rotating, and forcing investors to question their convictions.

In fact, history suggests that a period like this should not surprise us at all.

One chart I recently reviewed from Carson Research caught my attention. Looking at market performance throughout the month of June going back to 1950, the weakest part of the month has historically been right where we find ourselves today. The second half of June has often been characterized by softer performance and increased volatility.

Seasonality is never destiny, but it is often a useful reminder that markets move in rhythms. After the extraordinary gains we experienced during April and May, a summer slowdown should not be viewed as unusual. Frankly, it would be unusual if we didn’t get one.

What I find most interesting about the current environment isn’t the volatility itself.

It’s the dramatic shift in investor sentiment.

One of the greatest mistakes investors make is assuming today’s headlines will accurately predict tomorrow’s reality.

History repeatedly shows otherwise.

I was recently looking at several artifacts from prior market cycles.

In the late 1990s, optimism surrounding stocks was almost limitless. Policymakers openly discussed privatizing Social Security. Many believed stock ownership was such a powerful wealth-building tool that retirement systems should be tied directly to the market. Here are a few headlines from that time:

Foreign Affairs, July/August 1997 — “The Case for Privatization” by Martin Feldstein

The Wall Street Journal, Dec. 18, 1996 — “How to Replace Social Security” by Steve Forbes

CBS News, Feb. 18, 1999 — “Clinton’s Social Security Agenda”

Then came the technology bust.

Then came the Financial Crisis.

By 2009, the narrative had completely flipped.

Magazine covers questioned whether the 401(k) system itself would survive. Investors who had once embraced stocks suddenly wanted nothing to do with them. The same people who had enthusiastically promoted stock ownership a decade earlier were questioning whether equities were appropriate retirement vehicles at all.

Here is a Time Magazine cover from October 19, 2009:

The fundamentals did not change nearly as much as the emotions did.

That is an important lesson for today.

The market constantly swings between fear and optimism.

Headlines tend to amplify whichever emotion is dominant at the moment.

Investors who allow those emotions to dictate their decisions often find themselves buying high and selling low.

The reality is that wealth is rarely built by reacting to headlines.

It is built by owning productive assets over long periods of time.

One chart I frequently revisit illustrates this perfectly. Over the last thirty years, one dollar invested in the S&P 500 grew into more than nine dollars after adjusting for inflation. During that same period, the purchasing power of a dollar sitting in cash was cut by more than half.

That chart highlights what I believe is the single greatest long-term risk facing retirees.

It isn’t taxes.

It isn’t elections.

It isn’t market volatility.

It is inflation.

Volatility is uncomfortable, but inflation is permanent.

A 10% correction feels painful. A 50% decline in purchasing power happens quietly over decades.

That is why we continue to believe ownership of great businesses remains one of the most effective ways to preserve and grow wealth over time.

The same principle applies to investors worried that today’s market is somehow “too high.”

Another chart I recently reviewed examined what would have happened if an investor had committed capital at the peak of every major bull market since 1950.

The results were surprising.

Even investors who had terrible timing often achieved respectable long-term returns.

Why?

Because the long-term trajectory of productive businesses has historically been higher.

The lesson is not that valuation doesn’t matter.

The lesson is that time matters more.

One of my favorite examples of this principle comes from Jeff Bezos during the aftermath of the dot-com collapse.

By the time Amazon’s 2000 shareholder letter was written, the stock had fallen more than 80% from its peak. Investors who had once viewed Amazon as the future of commerce suddenly viewed it as one of the great excesses of the technology bubble. Headlines had shifted from euphoria to despair in a remarkably short period of time.

Yet Bezos pointed out something important. While Amazon’s stock price had collapsed, the underlying business had continued to improve. Revenue was growing. Customer counts were growing. Market share was growing. Cash reserves were improving. The business itself was becoming stronger even while investors were aggressively selling the stock.

In that letter, Bezos referenced Benjamin Graham’s famous observation that “in the short run, the market is a voting machine, but in the long run it is a weighing machine.”

That distinction is incredibly important.

In the short run, investors vote with emotion. They vote on headlines. They vote on fear, excitement, geopolitical events, elections, interest rates, and whatever narrative dominates the news cycle that week.

Over longer periods of time, however, the market begins weighing actual business results. Earnings growth matters. Cash flow matters. Competitive advantages matter. Innovation matters.

Amazon became one of the greatest examples in modern market history. Investors who focused on the votes were terrified by the 80% decline. Investors who focused on the weight of the business ultimately witnessed one of the most successful companies ever created. What looked like a disaster in 2000 became one of the greatest wealth creation stories of the next twenty-five years.

That lesson continues to influence how we manage money today.

When markets experience corrections, rotations, or periods of consolidation, our focus is not on the daily voting results. We are far more interested in what the scales will ultimately reveal years from now. We spend our time evaluating whether the businesses we own are becoming more valuable, whether their competitive positions are improving, and whether long-term demand for their products and services remains intact.

The market may vote against an investment for days, weeks, or even months. Eventually, however, the weighing machine tends to win.

That perspective is especially important today as investors navigate volatility surrounding Artificial Intelligence, technology stocks, and the broader market. Daily price movements may be loud, but they are not always informative. Our job is to focus on what is actually being built beneath the surface.

Which brings me to Artificial Intelligence.

I continue to believe investors are underestimating the speed at which AI will be adopted.

A chart from JPMorgan comparing major technological innovations throughout history is particularly revealing.

Electricity required decades to achieve broad adoption.

Telephones required decades.

Automobiles required decades.

The internet dramatically accelerated the process.

Smartphones accelerated it further.

Artificial Intelligence appears likely to move faster than all of them.

That shouldn’t be surprising.

Unlike previous innovations, AI is not being built on top of new infrastructure. It is being layered onto infrastructure that already exists. Billions of people already carry powerful computers in their pockets. Virtually every business already operates digitally.

The runway for adoption is enormous.

When I step back and look at the broader picture, I continue to believe we are much closer to the early innings of this transformation than the final innings.

That brings me to SpaceX.

Many clients have asked why we chose not to participate in the IPO despite my positive view of Elon Musk and the role his companies are playing in the future of AI, communications, energy, robotics, and transportation.

The answer is simple.

I loved the company.

I didn’t love the structure.

Only a small fraction of SpaceX shares were available to investors at the IPO. Scarcity alone can create powerful upward price pressure in the short term. However, the lockup schedule shows a significant amount of additional stock becoming available over the coming quarters and years.

Markets operate on supply and demand.

When supply expands dramatically, prices often struggle.

Could I be wrong?

Absolutely.

But I believed the risk-reward was unfavorable at the offering price.

I continue to believe there will be opportunities to own SpaceX in the future. I simply suspect that patience may prove rewarding.

In the meantime, we continue to spend significant time analyzing Tesla and other AI-related opportunities where we believe future value may not yet be fully appreciated by the market.

As we move deeper into the summer months and closer to the midterm elections, I expect volatility to remain elevated.

I expect scary headlines.

I expect sharp market moves.

I expect investors to be tested.

What I do not expect is for innovation to stop.

I do not expect inflation to disappear.

I do not expect the AI revolution to slow down.

And I do not expect the long-term wealth-building power of owning great businesses to suddenly stop working.

That remains the foundation of our investment philosophy and the reason we continue to stay focused on the long term rather than the next headline.

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.

Past performance does not predict future results.

After a very strong rally since early April, we believe the stock market deserves a breather. That does not mean the bull market is over. It simply means that markets need time to digest large gains, especially when a handful of areas have moved very far, very fast.

Several charts from Bespoke Investment Group help explain what is happening. One chart shows that both the S&P 500 and Nasdaq 100 had moved from overbought levels back toward neutral after last week’s pullback. That is a healthy reset. Another Bespoke chart showed a major rotation out of Technology and into Health Care, with Health Care outperforming Technology by one of the widest three-day margins since the early 2000s. In plain English, investors were not selling everything. They were taking profits in the biggest winners and moving money into areas that had lagged.

This is normal after a rally like the one we have seen. From late March into early June, the Nasdaq 100 had rallied more than 30%. Many artificial intelligence, semiconductor, space, and infrastructure-related stocks had risen even more. When stocks move that far in such a short period, air pockets can form. These are sharp, uncomfortable pullbacks that happen when too many investors are crowded into the same trade at the same time.

There is another factor investors should understand: the supply of stock is increasing. The upcoming SpaceX IPO, Google’s roughly $80 billion capital raise, and the recent valuation activity around companies like Anthropic all point to the same thing. Large companies and private AI leaders are taking advantage of strong investor demand by raising capital or preparing to sell shares to the public. That does not mean these businesses are weak. In fact, it confirms that the artificial intelligence buildout remains enormous. But when large amounts of new stock come to market, investors often sell existing holdings to make room. That can create short-term selling pressure.

We have seen this before. Strong markets often attract new issuance. Companies raise money when investor appetite is high. That new supply can temporarily weigh on the stocks that had been leading the market. It is a natural part of the cycle.

Importantly, the underpinnings of the economy remain solid. Job creation remains healthy. Inflation has cooled meaningfully from the highs of the last few years and is not running away. Corporate earnings remain generally strong. Consumers and businesses continue to spend. Credit conditions are not flashing broad distress. None of that suggests a major economic breakdown.

That said, we should expect more volatility. We are heading toward a midterm election later this year, and markets often become more sensitive to headlines as investors think about taxes, regulation, government spending, energy policy, and the direction of the economy. Political uncertainty can create additional air pockets even when the long-term market trend remains positive.

Our view is that the current pullback is more likely a reset than the start of a major bear market. We continue to believe the market can rally over the next several years. The artificial intelligence buildout is real. The demand for power, data centers, semiconductors, cloud infrastructure, software, automation, and productivity tools remains very strong. At the same time, we expect leadership to rotate. Some of the stocks that ran the hardest may need time to cool off, while other areas such as Health Care, Industrials, Utilities, Financials, and select value stocks may begin to participate more.

The key is not to overreact. Our job is not to avoid every short-term pullback. Our job is to stay focused on the long-term opportunity, own strong businesses, manage risk, and use volatility to improve portfolios where we can. To this end, our focus is on finding stocks that are growing more attractive in price as the selloff continue

In short, the market needed a breather. The current air pocket is uncomfortable, but not surprising. We remain constructive on the longer-term outlook and continue to believe the next several years will reward patient investors who stay disciplined.

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 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.