Dear Clients,
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.