The Sandbox Daily

Markets in review

EQUITIES: Russell 2000 +2.21% | Dow +1.62% | S&P 500 +1.02% | Nasdaq 100 +0.98%

FIXED INCOME: Barclays Agg Bond +0.14% | High Yield +0.31% | 2yr UST 3.877% | 10yr UST 4.382%

COMMODITIES: Brent Crude -3.47% to $113.94/barrel. Gold +1.58% to $4,632.3/oz.

BITCOIN: +1.33% to $76,449

US DOLLAR INDEX: -0.87% to 98.10

CBOE TOTAL PUT/CALL RATIO: 0.93

VIX: -10.21% to 16.89

Quote of the day

“There are people who make things happen, there are people who watch things happen, and there are people who wonder what happened. To be successful, you need to be a person who makes things happen.”

- Jim Lovell

What good is money

For most of the last few decades, financial advice has had a clear scoreboard: returns.

Did you beat the market? Did you outperform that benchmark? Did you “win”?

It’s a clean framework. It’s also an incomplete one.

Because at some point – usually not at the beginning, but eventually – clients start asking a different question.

What is all this for?

Call it the pursuit of funded contentment – aligning financial resources with a life that feels purposeful, healthy, and complete.

The challenge, of course, is that humans aren’t wired for contentment. We adapt quickly.

More becomes normal. Normal becomes insufficient. The goalposts move.

Which is why the goal isn’t just wealth creation. It’s clarity around what wealth is meant to do.

One way to think about this is through the Four C’s of Contentment:

Control. Not over markets or outcomes, but over behavior. Good planning creates a structured framework, so decisions aren’t driven by fear or euphoria.

Commitment. Money is most useful when it’s tied to something that matters. A goal. A value. A direction. Otherwise, it’s just accumulation for its own sake.

Connection. Wealth has diminishing returns in isolation. Relationships, whether that be family, friends, or community, are where it compounds in ways markets can’t.

Contribution. At a certain point, the question shifts from “Do I have enough?” to “What can I do with it?” Giving, helping, building are often the highest-return uses of capital.

And yet, none of this shows up neatly on a performance report.

But it’s the difference between wealth as a number and wealth as a tool.

Great financial planning is never just about beating an index over an arbitrary timeframe.

It’s about helping people live better lives – with intention, with clarity, and, ideally, with a sense that what they have is enough.

That’s a different benchmark. And a better one.

That’s all for today.

Blake

Questions about your financial goals or future?

Connect with a Sandbox financial advisor – our team is here to support you every step of the way!

Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.

Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.

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Fed Chair Jerome Powell's curtain call

Blake B. Millard — Tue, 28 Apr 2026 23:02:47 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

Powell’s curtain call

Let’s dig in.

Blake

Markets in review

EQUITIES: Dow -0.05% | S&P 500 -0.49% | Nasdaq 100 -1.01% | Russell 2000 -1.15%

FIXED INCOME: Barclays Agg Bond -0.04% | High Yield -0.14% | 2yr UST 3.834% | 10yr UST 4.342%

COMMODITIES: Brent Crude +2.74% to $111.20/barrel. Gold -1.78% to $4,610.3/oz.

BITCOIN: -0.70% to $76,441

US DOLLAR INDEX: +0.12% to 98.62

CBOE TOTAL PUT/CALL RATIO: 0.86

VIX: -1.05% to 17.83

Quote of the day

“The longer you wait to take that chance in your life, the shorter the future is going to be when you arrive there.”

- Daniel Arsham

Powell’s curtain call

At tomorrow’s Federal Open Markets Committee (FOMC) meeting, expect the Federal Reserve to stay on hold – with little change in tone relative to March – amid the ongoing uncertainties from the Iran conflict, in line with market expectations.

Nobody expects the Fed to do anything anytime soon, as long as there is a high degree of uncertainty over conflict resolution in the Middle East. In the meantime, inflation readings will remain elevated, while the unemployment rate remains historically low.

That’s a recipe for the FOMC to sit on its hands.

After Kevin Warsh’s testimony during his recent confirmation hearing, the market broadly sees policy on hold through 2026 – with the next interest rate cut expected sometime in 2027.

I’d refrain from fading this pricing given it broadly reflects the current distribution of risks. It will likely take sustained evidence of labor market tightening before market expectations materially shift in favor of more rate cuts, something President Trump is desperately seeking.

Beyond the FOMC statement and policy decision, the more noteworthy headlines tomorrow will center on Fed Chair Jerome Powell’s legacy.

Now that the Department of Justice has dropped its criminal probe against Jerome Powell and with Senator Tillis clearing the way for Kevin Warsh’s confirmation, Wednesday’s press conference will almost assuredly be Powell’s last as Fed Chair.

Powell’s term as Chair ends on May 15, 2026 after eight years leading the central bank, although his term as a member of the Fed’s Board of Governors technically runs until January 31, 2028. Powell remains undecided if he stays after vacating his Chair seat.

Powell will undoubtedly be asked to reflect on his time as Fed Chair.

Here is a brief account of Powell’s tenure:

The good: unemployment has been historically low, outside a once-in-a-lifetime pandemic spike

Under Powell’s 1st two years as Fed Chair, unemployment was notably low.

That changed in April 2020, when the onset of the pandemic pushed the figure up to 14.7%, the highest since at least 1948, when the modern unemployment rate was first published – largely driven by business closures, furloughs, and layoffs.

Unemployment has since cooled, and has hovered around the low 4% range for the past few years – a number that’s historically low but still a touch higher than when Powell took over.

Labor force participation has also weakened, reaching its lowest rate since the 1970s in March, excluding the pandemic.

The bad: inflation has remained stubbornly high

Inflation has remained stubbornly high during Powell’s time as Chair, with a rapid rise in 2021 and 2022 driven by highly accommodative twin monetary and fiscal policies from the pandemic as well as otherworldly consumer demand.

The chaos of the last few years has added to inflationary trouble on the supply side as well. Inflation was boosted by supply chain disruptions and dislocations caused during covid-19, further exacerbated by the start of the Russia-Ukraine war and high oil prices.

The year-on-year CPI inflation rate rose from 1% in late 2020 to its peak of 9% in June 2022. It cooled down to the low 2% range at the start of 2026, but reaccelerated in March this year due to the Iran war.

In hindsight, it’s easy to armchair quarterback and say the Fed acted too slowly in response to early inflationary impulses despite the difficulties of a chaotic and historic economic reopening. Perhaps some of the collateral damage could have been contained but it’s shortsighted to believe it could have been avoided.

The market fallout ensued after the FOMC carried out its fastest interest rate hiking cycle in history once it began tightening.

Right or wrong, inflation will dog the perception of Powell’s legacy in the years to come.

The great preserver: stressing Fed independence

Tensions over the last year between the White House and the Fed have brought the topic of Fed independence sharply into focus.

This is because there can be a natural friction between elected officials and the Fed, since they each have unique goals and incentives.

For instance, the President and Congress often prefer lower interest rates to spur economic growth and help fund the federal budget. In contrast, the Fed may need to make difficult choices around issues such as inflation and financial stability, based on longer-term considerations.

Preservation of independence was a common theme during Kevin Warsh’s hearing as many elected officials believe it to be paramount for economic and market structure going forward.

Powell’s unwillingness to bend to President Trump’s (very public) threats and sham lawsuit beautifully preserved the appearance of independence to even Powell’s most ardent critics.

Job well done here.

Oh yeah, one final thought.

Expect a parting shot at the President. I’d set the odds at -250.

Source: YCharts

That’s all for today.

Blake

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The role of housing on your personal balance sheet

Blake B. Millard — Mon, 27 Apr 2026 22:23:54 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

the Cornerstone of Household Wealth

Let’s dig in.

Blake

Markets in review

EQUITIES: S&P 500 +0.12% | Russell 2000 +0.04% | Nasdaq 100 +0.01% | Dow -0.13%

FIXED INCOME: Barclays Agg Bond -0.15% | High Yield +0.04% | 2yr UST 3.799% | 10yr UST 4.341%

COMMODITIES: Brent Crude +2.78% to $108.26/barrel. Gold -0.91% to $4,697.7/oz.

BITCOIN: -1.04% to $76,912

US DOLLAR INDEX: -0.06% to 98.48

CBOE TOTAL PUT/CALL RATIO: 0.79

VIX: -3.69% to 18.02

Quote of the day

“Life is what happens when you’re busy making other plans.”

- John Lennon

Housing market remains a core part of both household finances and the broader economy

For many households, a home represents not only where they live and raise their family, but also their largest financial asset, monthly expense, and source of debt.

From a broader economic perspective, the housing market is deeply intertwined with economic growth, consumer confidence, the labor market, and interest rates.

So, while investor attention has been on geopolitics and market volatility this year, the fact that home prices remain near all-time highs continues to play an important role in financial planning.

As the chart below illustrates, real estate is a hugely important component of household net worth across all generations.

For older Americans, real estate holdings often represent a significant share of total assets accumulated over decades. Baby Boomers, for instance, hold over $19.5 trillion in real estate, representing roughly 24% of their total net worth. For Gen X and Millennials, that share rises to approximately 34% and 60%, respectively.

Of course, real estate is also a significant source of outstanding debt for younger households that have not had time to pay off their mortgages or benefit from decades of housing market growth.

This “wealth effect” is important, especially when the stock market is volatile and the world feels uncertain.

When home values rise, homeowners tend to feel more financially secure and may be more willing to spend on goods and services, supporting broader economic growth. They may feel this way even if they do not actively access their home equity, such as through a reverse mortgage or home equity line of credit (HELOC).

This also highlights the importance of maintaining a holistic perspective around financial planning.

This is because short-term stock market swings, while never pleasant, are less impactful to an investor’s financial picture than they perceive in the moment, since much of their wealth is tied to other assets.

In fact, depending on the investor’s specific situation, prioritizing mortgages and other forms of debt may be more helpful than focusing on the stock market.

Inflation is another factor that is affected by housing costs, since it is the primary driver of the “shelter” category within the Consumer Price Index. Even before energy prices led to the latest jump in headline inflation, elevated shelter costs were an important reason that inflation has been slower to return to the Fed’s 2% target.

Of course, housing is not only the largest asset on most household balance sheets, but also the largest source of debt.

One encouraging aspect of today’s environment is that debt service levels (the size of debt payments relative to household income) are still moderate relative to history.

Mortgage underwriting standards have also been considerably more conservative since the 2008 Global Financial Crisis, when household debt levels were far higher.

Still, the burden of these debt payments is a real consideration for many households, particularly those who purchased homes in recent years at higher prices and interest rates.

From an economic perspective, healthy home prices could continue to support consumer balance sheets and the broader economy despite mixed activity.

From a financial planning perspective, it’s important for investors to have a clear understanding of their full financial picture – including their real estate.

While much ink has been written on stock market swings and the Middle East conflict year-to-date, the truth is that focusing on all aspects of your wealth is necessary in achieving personal long-term goals.

Source: Clearnomics

That’s all for today.

Blake

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Theory is easy. Living it is hard.

Blake B. Millard — Thu, 23 Apr 2026 23:21:07 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

theory vs. reality

Let’s dig in.

Blake

Markets in review

EQUITIES: Dow -0.36% | Russell 2000 -0.37% | S&P 500 -0.41% | Nasdaq 100 -0.57%

FIXED INCOME: Barclays Agg Bond -0.16% | High Yield -0.16% | 2yr UST 3.834% | 10yr UST 4.323%

COMMODITIES: Brent Crude +4.23% to $106.22/barrel. Gold -0.98% to $4,706.3/oz.

BITCOIN: -1.56% to $77,944

US DOLLAR INDEX: +0.23% to 98.82

CBOE TOTAL PUT/CALL RATIO: 0.86

VIX: +2.06% to 19.31

Quote of the day

“Forgive yourself for not knowing earlier what only time could teach.”

- Maya Angelou

Theory vs. Reality

Today I was reminded of an important quote from Morgan Housel’s book The Psychology of Money when discussing a framework for managing risk.

Specifically, the differences between theory and reality.

Theory is an explanation of how things are supposed to work.

Reality is how things actually work in the physical world.

“Studying history makes you feel like you understand something. But until you’ve lived through it and personally felt its consequences, you may not understand it enough...”

As you structure your portfolio, this is an important idea to keep in mind. In fact, it might be the most consequential element in the investing process.

You can look at historical charts to learn the frequency and depth of past market declines. Model different scenarios and twist the data until you’re blue in the face. Stare at hypothetical portfolio drawdown dollar and percentage amounts – doing your best to internalize them.

But, until you have lived through several declines yourself and watched your hard-earned dollars get cut in half, you may not understand your true tolerance for risk.

Until that time, then you might want to maintain an asset allocation that is a little less aggressive.

Because opening a finance textbook and reading of volatility and beta, value-at-risk, the Sharpe ratio, Sortino ratio, and hundreds of other conceptual matters are just quantitative tools. They don’t capture any of the human elements of investing.

Sure, much of investing is very mechanical in nature. Time horizon, asset allocation, portfolio costs, etc. But, do not dismiss for one second the squishy behavioral components.

The seven left tail risks of this decade are a good place to start with level setting your own expectations.

Revisit how you felt, and of much greater significance, take an honest assessment of how you traded your account during:

1) COVID-19 shutdowns of 2020

2) bullwhip supply chain mess of 2021

3) inflation spike of 2022

4) fastest Fed rate hiking cycle in history during 2022 and 2023

5) tariff and trade wars of Trump 2.0

6) Israel-Iran nuclear conflict of 2025

7) U.S.-Iran war of 2026

The perception gap is real. In fact, it looks a lot like this graphic below.

We all imagine a straight path in investing – rational decisions, steady gains, predictable responses. Black and white.

But the real world is messy. Emotions, surprises, and uncertainty tangle even the best-laid plans. Shades of gray.

The biggest threat to your financial plan isn’t the market. It’s abandoning the plan when it feels uncomfortable.

Sticking with a good plan beats chasing the perfect one.

That’s all for today.

Blake

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Reframe volatility as opportunity, not danger

Blake B. Millard — Tue, 21 Apr 2026 23:17:20 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

elevated volatility creates BTD opportunities

Let’s dig in.

Blake

Markets in review

EQUITIES: Nasdaq 100 -0.42% | Dow -0.59% | S&P 500 -0.63% | Russell 2000 -1.00%

FIXED INCOME: Barclays Agg Bond -0.37% | High Yield -0.26% | 2yr UST 3.781% | 10yr UST 4.294%

COMMODITIES: Brent Crude +3.83% to $99.14/barrel. Gold -1.94% to $4,735.3/oz.

BITCOIN: -1.71% to $75,668

US DOLLAR INDEX: +0.29% to 98.38

CBOE TOTAL PUT/CALL RATIO: 0.91

VIX: +3.34% to 19.50

Quote of the day

“To play a wrong note is insignificant. To play without passion is inexcusable!”

- Ludwig van Beethoven

Elevated volatility creates buy-the-dip opportunities

The Volatility Index (VIX), developed by Dr. Robert Whaley back in 1993, gauges “fear and greed” in the stock market by measuring the 30-day implied volatility of S&P 500 index options.

In plain English, VIX is a market-based measure trying to assess the future movement of U.S. large cap stocks over the next month. It typically shows an inverse relationship with the S&P 500.

As a helpful rule-of-thumb, a 16 VIX implies a one-day move in the S&P 500 of roughly +/-1%. A 30-ish VIX implies a one-day move of +/-2%.

Notably, on March 30, the VIX eclipsed 30 – its highest level since Liberation Day in April 2025.

The table below shows the weekly S&P 500 index forward returns when the VIX crosses above 30.

Since 1990, there have been 94 instances in which the volatility index has crossed above 30.

The average forward returns for the S&P 500 over the next 3-months (13-week), 6-months (26-week), and 12-months (52-week) weeks were +5.1%, +9.0%, and +12.9%, with positive hit rates all over 70%.

While a VIX above 30 doesn’t guarantee a market low is in place, it does often set the stage for a tradeable bottom.

So, when a similar reading flashes in the future, reframe volatility in your mind to imply opportunity, not danger.

Source: Piper Sandler

That’s all for today.

Blake

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Temporary shock, permanent rally?

Blake B. Millard — Tue, 21 Apr 2026 00:57:14 GMT

Welcome, Sandbox friends.

After a brief spring break hiatus, we are back to our regularly scheduled programming.

Today’s Daily discusses:

what the market is pricing in

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +0.58% | Dow -0.01% | S&P 500 -0.24% | Nasdaq 100 -0.31%

FIXED INCOME: Barclays Agg Bond -0.01% | High Yield -0.09% | 2yr UST 3.721% | 10yr UST 4.252%

COMMODITIES: Brent Crude +5.32% to $95.19/barrel. Gold -0.92% to $4,834.8/oz.

BITCOIN: -1.57% to $75,973

US DOLLAR INDEX: -0.04% to 98.05

CBOE TOTAL PUT/CALL RATIO: 0.66

VIX: +7.95% to 18.87

Quote of the day

“We don’t heal in isolation, we heal in connection.”

- Esther Perel

What the market is telling us

Step back and the market’s message is actually quite consistent:

The Iran conflict is not being treated as a growth shock. It’s being treated as a temporary inflation shock.

That distinction matters.

Over the past few weeks, despite rising oil prices and geopolitical uncertainty, earnings estimates have continued to move higher, not lower. That tells you everything you need to know about how investors are framing the environment.

Markets are looking through the noise.

They’re betting the economic slowdown remains shallow, inflation pressure from energy is temporary, and, most importantly, earnings will hold.

Because historically, markets don’t sell off on short-term disruptions. They sell off on sustained earnings deterioration or an abrupt tightening in financial conditions.

So far, neither has materialized.

That brings us to where we are today.

The setup is no longer theoretical. It’s execution-dependent.

From here, the market needs:

The ceasefire to hold, or at least not materially worsen
The U.S. economy to prove it hasn’t rolled over
Mega-cap tech to deliver on elevated expectations

After the surge in Technology stocks and a sharp market recovery, the bar has been raised. Expectations remain high.

There’s also a powerful technical layer supporting this market right now: positioning and flows.

After significant degrossing throughout Q1, systematic strategies have aggressively added equity exposure, professional money managers have been covering shorts, and rising prices reinforce FOMO.

It’s the classic reflexive loop: higher prices -> more buying -> higher prices.

This dynamic is real, but it has a shelf life.

As positioning fills up, the marginal buyer becomes harder to find. At that point, the burden shifts back to fundamentals – earnings and economic data – to sustain the move.

Of course, leadership in the market still matters.

Large-cap tech has snapped back into gear, reasserting its leadership on this v-shaped recovery and once again anchoring the indexes with robust revenue and earnings growth.

That’s an important shift, because since last fall, the market’s core engine had been slowly and steadily losing momentum. Now, it’s back, and that’s a big reason the index-level strength looks so convincing.

What’s most impressive is this market recovery has taken hold while sentiment remains at its lowest point in modern market history.

Earlier this month, the University of Michigan Consumer Sentiment Index plunged 5.7 points in the preliminary April survey to 47.6, a record low and well below expectations.

This is a data series going back to the 1950s, so it seems a month-long war with Iran has weighed more severely on sentiment than recessions, the dotcom bust, the Global Financial Crisis, the European Debt Crisis, Covid-19, and everything in-between.

While the economy continues to grow and job layoffs remain low, public confidence has completely collapsed.

The disconnect between the reality (data) and the mood (vibes) is so profound that I had to discuss with Nicole Petallides last week on Schwab Network TV.

So, what’s the lesson for investors at home?

Despite the ongoing Iran conflict – and the very real risks that come with it – the broader message hasn’t changed: staying invested and staying the course remains the best option for investors.

Periods of uncertainty feel uncomfortable in real time, but they’re often when opportunities are most attractive for long-term investors.

Geopolitical shocks tend to move prices faster than they move fundamentals. And, more often than not, earnings expectations don’t fall as much as stock prices do during these episodes.

For investors, the implication is straightforward: maintain a long-term perspective, stay balanced, and resist the urge to overreact to short-term noise.

Because in markets like this, patience isn’t just a virtue. It’s an edge.

Sources: Goldman Sachs, Optuma, YCharts, University of Michigan

That’s all for today.

Blake

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Process over everything

Blake B. Millard — Tue, 31 Mar 2026 20:56:31 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

process over everything

Let’s dig in.

Blake

Markets in review

EQUITIES: Nasdaq 100 +3.43% | Russell 2000 +3.41% | S&P 500 +2.91% | Dow +2.49%

FIXED INCOME: Barclays Agg Bond +0.25% | High Yield +0.97% | 2yr UST 3.801% | 10yr UST 4.321%

COMMODITIES: Brent Crude +4.94% to $118.35/barrel. Gold +3.46% to $4,715.1/oz.

BITCOIN: +1.96% to $67,832

US DOLLAR INDEX: -0.66% to 99.85

CBOE TOTAL PUT/CALL RATIO: 1.07

VIX: -17.50% to 25.25

Quote of the day

“The greatest mistake you can make in life is to continually fear that you will make one.”

- Elbert Hubbard

Building conviction in a world of shifting narratives

In ode to Cullen Roche, here are three things I think I think:

1. No and know

Everyone needs an investment philosophy.

A framework of first principles.

Marty Zweig famously had his “Don’t fight the Fed,” while Bob Farrell is often cited for his 10 rules of thumb. My personal favorite? Sam Ro.

Simple, rules-based, arbitrary heuristics, technicals… whatever it is, make sure it fits you. You can’t simply copy someone else.

If the philosophy doesn’t fit your temperament, you’ll fall apart at all the wrong moments. The key is aligning your temperament with your investment strategy and building from there.

My no and know philosophy is simple.

“No” means declining a lot of things. And, when I say a lot, I mean more than you think. I owe a debt of gratitude to Justin Waring at UBS for teaching me this. He said no to everything.

Then, because you say no to so many things, what you do own, you can know these assets and structures very well.

Jim Cramer is known for calling this “buy and homework.”

2. Water the flowers, cut your weeds

You only get a few investment ideas truly right over your investing horizon – and you only need a few.

For me, it was Texas Pacific Land Corporation (TPL). Hat tip to Horizon Kinetics and my old boss at UBS, Greg Marcus, for that one.

The idea here is simple: allocate more capital to your best-performers while trimming or exiting your dogs. Over time, this can significantly improve returns by letting winners compound and preventing losers from dragging down your portfolio.

When you find one of these high conviction ideas, you have to be willing to stay with them.

That can mean gut-wrenching volatility and drawdowns along the way. TPL, for example, I’ve experienced five separate +40% pullbacks along the way, despite holding tax lots showing 8x and 10x baggers.

Speaking of which…

3. Volatility is the toll you pay to play

Volatility is the price you pay for performance.

Seriously, Ryan Detrick of Carson Group has the data to back it up.

I believe few people in this business – investment professionals, clients, or otherwise – can truly stomach volatility.

However, if you can stick out those thorny downdrafts and stay disciplined to your process, you can create an arbitrage, especially in a market like today that’s dominated by algo traders and passive investing.

Markets move in the blink of an eye. Momentum, exacerbated by these two behemoth structural shifts, contributes to my disciplined, stay-invested mentality because markets will move before you gain the mental fortitude to buy back in.

You may not like the rules of the casino, but that’s how they work and it’s best not to position yourself against the grain.

In volatile periods, I try to deconstruct what the market is saying versus what’s actually happening.

Many times, the move is driven by the narrative. It’s price, rather than fundamentals.

With good, high-quality assets, earnings don’t usually change that quickly. The market’s perception can change much faster than underlying fundamentals.

In those moments, the key is separating narrative from reality.

Sometimes that leads you to act, but often the right response is to do nothing: to hold your position if the core investment thesis and fundamentals remain intact.

Acting rationally in the face of volatile swings in the market and a sea of red is incredibly challenging, but that discomfort is exactly the admission price.

Those who can sit through it don’t just survive volatility, they get paid for it.

That’s all for today.

Blake

Questions about your financial goals or future?

Connect with a Sandbox financial advisor – our team is here to support you every step of the way!

Please see additional disclosures (click here)

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US oil settles above $100 a barrel for first time since 2022

Blake B. Millard — Mon, 30 Mar 2026 23:53:21 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

$100 oil

Let’s dig in.

Blake

Markets in review

EQUITIES: Dow +0.11% | S&P 500 -0.39% | Nasdaq 100 -0.78% | Russell 2000 -1.46%

FIXED INCOME: Barclays Agg Bond +0.51% | High Yield +0.11% | 2yr UST 3.838% | 10yr UST 4.351%

COMMODITIES: Brent Crude +0.19% to $112.78/barrel. Gold +0.36% to $4,540.4/oz.

BITCOIN: +0.43% to $66,864

US DOLLAR INDEX: +0.33% to 100.48

CBOE TOTAL PUT/CALL RATIO: 0.96

VIX: -1.42% to 30.61

Quote of the day

$100 oil

U.S. oil prices are now trading above $100 a barrel for the first time since the United States and Israel launched a war against Iran.

The world remains beholden to the re-opening of the critical Strait of Hormuz, which Iran has effectively closed to oil tankers during the conflict.

Some 20-25% of the world’s oil supply and 20% of its liquefied natural gas passes through this critical shipping lane, and the ease with which it was shut down may permanently change how countries approach their own sovereign energy policies.

This conflict will require a new playbook going forward. Despite all the many conflicts in the Middle East over the years, not one has caused a total shutdown of the Strait of Hormuz.

Having parsed through many sell-side and independent research reports over the last few weeks, this post-war global economy will likely change in three key ways:

The world needs reserves away from the Middle East.
Most of the world’s excess oil sits on the wrong side of the Strait, making it largely inaccessible in the case of a shutdown. This will force countries to rethink the value of that spare capacity. Put another way, countries may look to re-categorize the excess supply that sits in this region, counting only a portion of it as actually accessible.
Greater emphasis on strategic stockpiles.
Once this conflict is over, countries will look to build domestic reserves to even higher levels than before. The U.S. never managed to refill its Strategic Petroleum Reserve to pre-2022 levels. Coming out of this, there will likely to be increased effort to do so, especially in Europe and Asia, which are really feeling the carnage from this oil disruption.
Higher prices for longer.
We likely see a premium on oil supplies that do not pass through the Strait. And, since energy is a global commodity, premiums on oil from one place will drive up prices overall, even if Strait supply lines trade at a discount.

The winners in all of this, of course, are companies in the energy sector. Several shops estimate 2026 earnings will be double its prior expectations.

The losers? Basically everyone else. Higher oil prices erode consumer spending power and raise a key input cost for companies, which must then absorb or pass along through higher prices. Even with a resolution to the war, corporate margins could be pressured, or prices passed through, resulting in a rebound in inflation, neither of which is good for stocks or the hope for lower interest rates.

While oil prices may stay higher in the short- to intermediate-term, stocks should rally on a resolution to the war, whenever that happens.

The Volatility Index (VIX) has now closed above 30. History shows that’s not necessarily a bad thing for forward returns.

Since 1990, when the VIX has closed between ~28 and ~33, the S&P 500’s forward 6-month return has averaged +9.5%. Compare that to the calm periods below 15, where forward 6-mo returns cluster around 5%.

In other words, elevated fear has created opportunity for patient investors that can stomach the volatility.

Sources: Bloomberg, Exhibit A

That’s all for today.

Blake

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Risk is not symmetric

Blake B. Millard — Wed, 25 Mar 2026 22:35:30 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

Deep Risk vs. Shallow Risk

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +1.23% | Nasdaq 100 +0.67% | Dow +0.66% | S&P 500 +0.54%

FIXED INCOME: Barclays Agg Bond +0.35% | High Yield +0.32% | 2yr UST 3.891% | 10yr UST 4.336%

COMMODITIES: Brent Crude -2.02% to $98.21/barrel. Gold +2.88% to $4,561.9/oz.

BITCOIN: +2.27% to $70,730

US DOLLAR INDEX: +0.21% to 99.65

CBOE TOTAL PUT/CALL RATIO: 0.89

VIX: -6.01% to 25.33

Quote of the day

“The strongest people are not those who show strength in front of us, but those who win battles we know nothing about.”

- Jonathan Harnisch

Deep Risk vs. Shallow Risk

In William Bernstein’s book Deep Risk, he draws an important distinction for investors between “Deep Risk” and “Shallow Risk.”

Deep Risk is Bernstein’s term for permanent loss of capital. Risks like hyperinflation, confiscation, and severe economic collapse can erode wealth over long periods and are quite difficult to recover from – making them particularly dangerous for long-term investors.

Shallow Risk involves more run-of-the-mill declines in asset prices resulting from day-to-day volatility, short-term economic disruptions, and episodic market dislocations. Shallow Risk is what most investors are accustomed to: market downturns that last a few days or weeks, but they eventually come and go. While unsettling, these risks tend to reverse over time, meaning investors who stay patient and diversified often recover their losses.

In mathematical terms, the catch-up game to recover from losses becomes more problematic as you shift away from “Shallow Risk” and closer to “Deep Risk.”

Bernstein wrote this book because he saw a gap in investors’ thinking.

When we think about risk, most of us focus almost exclusively on Shallow Risk – periodic losses that are transitory.

But Deep Risk – the risk of permanent impairment – is often overlooked when we think about the range of possible outcomes. This shortfall in thinking is intuitive: gaming out the worst possible scenarios for every decision we make is no way to live.

So, Bernstein’s message is straightforward: pay attention to both.

And don’t minimize the probability of Deep Risk, even if they’re the types of events that we haven’t seen recently.

William Bernstein himself writes, “Put into different words, Shallow Risk, if handled properly, deprives you only of sleep for a while; Deep Risk deprives you of sustenance.”

Bottom line: a smart approach is to maintain a diversified portfolio, stay invested through volatility, and hedge against Deep Risks with assets like U.S. Treasuries or gold.

Source: William Bernstein

That’s all for today.

Blake

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Stop trying to fix your portfolio

Blake B. Millard — Tue, 24 Mar 2026 21:01:34 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

staying on the level

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +0.45% | Dow -0.18% | S&P 500 -0.37% | Nasdaq 100 -0.77%

FIXED INCOME: Barclays Agg Bond -0.27% | High Yield -0.34% | 2yr UST 3.942% | 10yr UST 4.408%

COMMODITIES: Brent Crude +3.98% to $99.74/barrel. Gold -0.13% to $4,412.6/oz.

BITCOIN: -1.14% to $69,971

US DOLLAR INDEX: +0.47% to 99.41

CBOE TOTAL PUT/CALL RATIO: 0.99

VIX: +3.02% to 26.94

Quote of the day

“We assume it’s the world around us that causes the feeling of busyness, but often, it’s the movement of our mind.”

- Andy Puddicombe, Headspace Co-Founder

Staying on the level

The ongoing conflict in Iran and rising oil prices have been the primary drivers of significant market swings in recent weeks.

Brent crude hovers around $100 per barrel, which is raising questions about whether higher energy costs could slow economic growth while also pushing inflation higher.

This adds to lingering concerns around broader market valuations, private credit, the path of Federal Reserve policy, and the AI story. Does anyone even remember that SaaSpocalypse boogeyman all the way back from last month?!??

For investors, these concerns create uneasiness, and that ongoing tension fuels a desire to do something.

The author Alfred A. Montapert once wrote “do not confuse motion and progress.”

With markets undergoing meaningful cross-asset volatility and many charts showing downtrends in Q1, there is a human element, or tendency, to believe that portfolios must be adjusted frequently.

However, a key principle of proper planning is that by the time uncertainty strikes, the hard work has already been done.

You’ve built the proper expectations, you’ve built a top-down portfolio that you can stick with through the ups AND downs, and you’ve trained yourself that market pullbacks are a part of the process.

A well-constructed investment strategy is built over years, not days and weeks.

It’s designed to weather different types of market environments without the need for constant adjustment.

Still, markets that lack a clear direction can feel uncomfortable. In times like these, maintaining a level-headed perspective is critical when there is so much negativity in the news.

As I always say, stay the course.

It’s more important than ever to not lose sight of why you invested in the first place, because saving and investing (rationally) are still the best ways to build durable wealth over time.

Source: Ned Davis Research

That’s all for today.

Blake

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Why invest abroad?

Blake B. Millard — Wed, 18 Mar 2026 22:45:01 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

why invest abroad?

Let’s dig in.

Blake

Markets in review

EQUITIES: S&P 500 -1.36% | Nasdaq 100 -1.43% | Dow -1.63% | Russell 2000 -1.64%

FIXED INCOME: Barclays Agg Bond -0.42% | High Yield -0.51% | 2yr UST 3.779% | 10yr UST 4.265%

COMMODITIES: Brent Crude +7.31% to $110.98/barrel. Gold -3.68% to $4,823.9/oz.

BITCOIN: -4.76% to $71,198

US DOLLAR INDEX: +0.62% to 100.192

CBOE TOTAL PUT/CALL RATIO: 1.00

VIX: +12.16% to 25.09

Quote of the day (**hat tip Ryan Detrick for this one)

“I never worry about the problem. I worry about the solution.”

- Shaquille O’Neal

Why invest abroad?

The S&P 500 index has been moving sideways for exactly six months, consolidating gains from recent years and chopping up traders in the meantime. This has led some investors to look abroad for other opportunities.

So, one must ask: what is the bull case for international markets?

A few things come to mind. But first, let’s back up.

U.S. stocks have dominated international stocks over the past 20-ish years.

This trend reversed abruptly in 2025 (ACWI ex-U.S. +32% vs. S&P 500 +17%) and has continued into 2026, at least until the recent exogenous shock from the Iran conflict.

To believe this longstanding trend is in the midst of a durable trend change in favor of international markets, one likely trusts in some combination of these various tailwinds converging.

Global growth is broadening

The U.S. now accounts for only ~26% of global GDP, down from ~40% in 1960. In other words, roughly three-quarters of the world’s economic activity is now happening outside the borders of the United States.

EM’s footprint has surged – their share of world GDP jumped from ~25% in 1980 to ~40% today. China alone represents nearly 20% of global output, reflecting how growth engines have shifted towards Asia and other developing economies.

Today, global growth is more balanced. Rising investment and productivity across Europe, Japan, and Emerging Asia have contributed to a more broad-based global growth profile. The Covid-19 pandemic caused countries to focus on protecting domestic supply chains in the interest of national security.

In other words, the United States is no longer the sole growth engine for the global economy.

The gap in valuations remains

U.S. stocks are priced for perfection and trade at a hefty premium: international equities trade at a ~30-40% discount relative to U.S. markets, one of the widest gaps in decades.

History shows that after extended runs, leadership often flips – a pattern we may be seeing as valuation extremes and performance trends start to reverse.

Dollar weakness is a return amplifier

The U.S. Dollar Index (DXY) fell 9.5% in 2025, touching a four-year low. This removed a key headwind for U.S.-based investors abroad as overseas gains now translate into larger USD returns.

Historically, nearly every major run of international outperformance has aligned with a weakening dollar.

This currency tailwind is again evident today, echoing past cycles when a soft dollar helped tilt leadership towards international markets.

Investors are shifting out of the dollar and into hard assets, such as gold, in meaningful ways. A mix of long-term trends and intermediate-term policies suggest prolonged dollar weakness:

excessive debt in the U.S. with no end in sight
U.S. declining share of global growth
a move away from globalization
trade policies, tariffs
further Fed rate cuts

Tariff policy is net dovish on a go-forward basis

The recent SCOTUS ruling striking down Trump’s IEEPA tariffs reduces baseline U.S. tariff levels, creating lower trade barriers for key export economies, particularly emerging markets.

Economies with high past tariffs and significant reliance on U.S. exports stand to benefit, while China and the EU may face more competitive pressures.

Whatever the final policy that is put into place, one thing is certain: reduced uncertainty will benefit stocks, home or abroad.

Is a rebalancing of your global equity exposure warranted in 2026?

Something to monitor closely in the weeks and months ahead.

Sources: YCharts, Visual Capitalist, Bloomberg, Strategas, Ned Davis Research

That’s all for today.

Blake

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Iran conflict: monitoring three otherwise bullish indicators that could flip bearish

Blake B. Millard — Wed, 18 Mar 2026 00:23:33 GMT

Welcome, Sandbox friends.

I was delighted to share my highest conviction idea with Phil Rosen’s Best Ideas Club, a company I’ve followed and owned for the last decade. I’ve always been fascinated by businesses that offer asymmetric potential, and this company delivers that opportunity better than any other.

Check out the write-up and Phil Rosen’s Opening Bell Daily for more awesome content on markets and personal finance.

Best Ideas Club

Today’s Daily discusses:

Iran conflict: monitoring three otherwise bullish indicators that could flip bearish

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +0.67% | Nasdaq 100 +0.51% | S&P 500 +0.25% | Dow +0.10%

FIXED INCOME: Barclays Agg Bond +0.20% | High Yield +0.45% | 2yr UST 3.676% | 10yr UST 4.202%

COMMODITIES: Brent Crude +3.39% to $103.61/barrel. Gold +0.11% to $5,007.6/oz.

BITCOIN: +0.79% to $74,558

US DOLLAR INDEX: -0.16% to 99.56

CBOE TOTAL PUT/CALL RATIO: 1.05

VIX: -4.85% to 22.37

Quote of the day

“Service to others is the rent you pay for your room here on earth.”

- Muhammad Ali

Iran conflict: monitoring three otherwise bullish indicators that could flip bearish

Continuing yesterday’s discussion over the Iran conflict, we’re flagging three important implications worth monitoring for the economy and U.S. stocks in the coming days, weeks, and months.

Coming into the year, one of the primary concerns was that the market was vulnerable to the typical midterm year correction, given three strong consecutive years of double-digit index gains and historically elevated valuations.

Market declines, even ones as consistent as during Q2 – Q3 of midterm years, require a catalyst.

The three items on my list below discuss how the Iran conflict could be a catalyst by flipping otherwise bullish indicators bearish.

Rekindling inflationary spirits

An obvious candidate is inflation.

Headline CPI, which unlike the Fed’s preferred inflation gauge includes energy prices, has been in a downward trajectory since August 2022. Hence, I consider disinflation as having been one of the key drivers of the cyclical bull market.

The good news for the bulls is that there is plenty of wiggle room for inflation to rise before this key inflation indicator turns bearish. The year-on-year change in the CPI (2.4%) sits below the 6-month average (2.8%), so some near-term effects can be absorbed before it becomes problematic.

While unit labor costs are tame and inflation expectations remain well-anchored, the Fed must closely monitor downstream impacts from this oil shock and rising energy input costs.

Throughout modern market history, oil shocks are often associated with recessionary economic conditions.

Fed’s tricky path in 2026

The market hates uncertainty, and a new Fed chair generates additional uncertainty around future monetary policy.

While the early days of some new Fed chairs have gone smoothly, in other cases, new chairs have faced crises. The average correction of 14.8% during the first 6 months implies that investors have sold first and asked questions later.

Investors have expected a Warsh-led Fed to be dovish, at least when it comes to the Fed Funds Rate early in his term. Assuming he is confirmed in the next few months, a protracted war in the Middle East could delay the next phase of the easing cycle.

Rotation confusion

From a technical perspective, the defining characteristic of 2026 year-to-date is the rotation out of previous winners of large-cap tech stocks and into real economy “HALO” stocks.

Rotations and consolidations can be healthy in that they prevent the market from becoming too narrow. If they go on for too long, however, they can morph into a topping process.

This is the current state of affairs for the S&P 500, and the churning under the hood is spooking investors.

With the S&P 500 pulling back ~5% from its January highs, some investors have been tempted to side-step this Iran conflict and “wait for things to calm down.” In fact, investors pulled money out of U.S. equity funds for the first time since last April – see the chart below.

Technology has been the pillar of strength this entire cycle, although it’s been dead money for the last six months. If the sector that normally leads bull markets continues to break down, we may need to start asking if something more ominous is brewing.

Bottom line?

Barring a prolonged disruption of global oil supplies, the conflict is unlikely to end the 3.5-year cyclical bull market by itself. Instead, add it to the growing list of risks the market is facing heading into the middle of midterm years.

Sources: Exhibit A, Ned Davis Research, Todd Sohn (Strategas)

That’s all for today.

Blake

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How $100 oil and the Middle East conflict are affecting investors

Blake B. Millard — Tue, 17 Mar 2026 00:06:21 GMT

Welcome, Sandbox friends.

After some time off from Future Proof and South Beach, we are back and ready to discuss the latest market dynamics !

Today’s Daily discusses:

$100 oil

Let’s dig in.

Blake

Markets in review

EQUITIES: Nasdaq 100 +1.13% | S&P 500 +1.01% | Russell 2000 +0.94% | Dow +0.83%

FIXED INCOME: Barclays Agg Bond +0.39% | High Yield +0.32% | 2yr UST 3.673% | 10yr UST 4.222%

COMMODITIES: Brent Crude +1.19% to $101.40/barrel. Gold +0.09% to $5,006.9/oz.

BITCOIN: +3.89% to $74,802

US DOLLAR INDEX: -0.54% to 99.821

CBOE TOTAL PUT/CALL RATIO: 0.90

VIX: -13.53% to 23.51

Quote of the day

“Your present circumstances don’t determine where you can go. They merely determine where you start.”

- Nido Qubein, President of High Point University

How $100 oil and the Middle East conflict are affecting investors

In the past two weeks, oil prices have spiked due to the conflict in Iran, cross asset volatility has risen, and both investment-grade and high-yield credit spreads have widened meaningfully. At the same time, eco data has skewed on net weaker.

The situation in Iran is evolving rapidly, and headlines remain negative. Naturally, investors are concerned what this means for markets, oil prices, and their portfolios.

President Dwight D. Eisenhower once said that “plans are worthless, but planning is everything.”

Eisenhower’s lesson is that specific geopolitical or market events are inherently unpredictable, but the fact that they occur regularly is not.

The process of structuring a portfolio and making financial plans is designed precisely to deal with this uncertainty. While each event is unique, financial markets have navigated countless wars, crises, and regional conflicts, including the U.S. operation in Venezuela earlier this year.

Like most historical instances, the key for long-term investors is to separate geopolitical headlines from portfolio decisions.

Oil is one of those commodities that touches nearly every part of our lives, from the gasoline we pump into our cars to the cost of groceries and manufactured goods. Understanding how oil prices affect inflation, consumer spending, and growth is key for staying on target.

Here are some key points for your to consider:

Oil prices have risen sharply due to ongoing conflict in Iran, with Brent crude around $100 per barrel and WTI just below that.
The key consideration is the Strait of Hormuz, a crucial waterway that connects the Persian Gulf to the rest of the world. Approximately 20 million barrels of crude oil, condensate, and petroleum products travel through the Strait of Hormuz daily, representing about 20% of global daily oil consumption. Asia and Europe are most exposed to rising energy prices.

Saudi Arabia, Kuwait, Iraq, and other Middle Eastern countries are actively cutting production. With the Strait of Hormuz restricted, some countries could run out of storage capacity, requiring them to slow production. Current estimates suggest fuel exports from the region are down 60% from just last month.

The U.S. is in a stronger position today than during previous oil crises due to the shale revolution. As the world’s largest producer of both oil and natural gas, the U.S. benefits from energy independence that did not exist during other historical oil shocks.

Oil prices that rise significantly can act like an extra tax on households, since driving and buying goods are everyday necessities. Since consumer spending makes up more than two-thirds of U.S. GDP, rising energy costs can squeeze household budgets and slow economic growth if people have less money to spend on other things.
One thing people all hate is higher gasoline prices at the pump.

Still, it’s important to maintain perspective. While oil prices have increased roughly 50% recently, they are still well below their peaks in 2022 when Russia invaded Ukraine, so this isn’t unchartered territory. Back then, oil prices jumped to $128 per barrel, far above where they are today, and remained there for some time.

That also occurred when inflation was already a challenge due to the pandemic, compounding the problem further. Today, inflation has been on a declining trend. So, what matters is how long oil prices stay high, which will depend on geopolitical factors that are difficult to predict.

These developments complicate the Federal Reserve’s decision-making process. The Fed must now balance supporting the job market, which has weakened over the past year, while also watching for potential inflation driven by higher energy prices. This is a tricky balancing act, so even more attention will be placed on the incoming Fed Chair.
The Fed makes a policy decision this week on Wednesday, where the chair is expected to announce no cuts at this meeting.

Most importantly for investors, recent history suggests that markets have shown resilience to energy shocks and a spike in oil prices.

Since 1986, there have been 8 prior instances of oil surging 20% or more over a two-day period. In 7 of 8 cases, the S&P 500 index was higher one year later – with an average forward return of roughly 24%.

So, while short-term oil price spikes can create economic headwinds and market volatility, history shows that economies adapt over time, and maintaining a long-term perspective is essential to navigating these periods of uncertainty.

Sources: Bank of America Global Research, Reuters, YCharts, Exhibit A

That’s all for today.

Blake

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Active management underperforms, again

Blake B. Millard — Thu, 05 Mar 2026 00:04:12 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

active management underperforms, again

Let’s dig in.

Blake

Markets in review

EQUITIES: Nasdaq 100 +1.51% | Russell 2000 +1.06% | S&P 500 +0.78% | Dow +0.49%

FIXED INCOME: Barclays Agg Bond -0.04% | High Yield +0.35% | 2yr UST 3.551% | 10yr UST 4.096%

COMMODITIES: Brent Crude +1.38% to $82.52/barrel. Gold +0.57% to $5,152.8/oz.

BITCOIN: +7.08% to $73,227

US DOLLAR INDEX: -0.29% to 98.767

CBOE TOTAL PUT/CALL RATIO: 0.96

VIX: -10.25% to 21.15

Quote of the day

“Always make room for people to go with you into your future, but never sacrifice your future for those who want you to stay exactly how you are. You need people in your life who will cheer you on as you risk and grow. You need people in your life who will celebrate your success.”

- Erwin McManus, Mind Shift

Active management underperforms, again

One of the most noteworthy trends in market structure this side of 2000 is the undeniable capital shift from mutual fund vehicles to exchange-traded products (ETFs).

The benefits of ETF investing are indisputable:

Transparency: Daily holdings disclosure leads to more visibility of underlying securities, better pricing during market stress, and tighter spreads

Liquidity: Exchange trading provides intra-day liquidity and constant price discovery, especially in illiquid market segments

Cost-effective: One fee structure, lower expense ratios, and fewer operational frictions translates to lower costs for investors

Tax-efficiency: In-kind redemptions reduce taxable trading activity

Accessibility: Provides access to diverse asset classes that are available to all investors, whether active or passive, with no minimum investment thresholds

These dynamics are powerful tailwinds chasing more and more assets into ETFs.

Mutual funds still hold more money than ETFs, but the gap is shrinking quickly. Today, roughly $14 trillion in assets are invested in ETFs, versus an estimated $25-$30 trillion in mutual funds.

And yet, despite the obvious benefits to owning ETF structures over mutual funds, the most powerful driver of flows continues to be, and always will be, performance.

S&P Global released their annual SPIVA scorecard that compares actively managed funds against their appropriate benchmarks so the investing public can better understand the performance of investment managers.

Two common themes have emerged over time:

Actively managed funds have historically tended to underperform their benchmark over short- and long-term time horizons.

Even when actively managed funds in a category have outperformed their benchmark over one time period, the chance of that same fund’s persistent and continued outperformance is unlikely because most have failed to do so over multiple time frames.

2025 was no different: 79% of all active large-cap U.S. equity funds underperformed the S&P 500 index.

That’s worse than the 65% rate observed in 2024 and the 4th worst year for active large-cap managers over the 25-year history of the SPIVA Scorecards.

The last year in which the majority of fund managers in this category beat the index was 2009. 16 consecutive years of underperformance and counting.

While dispersion was conducive to stock selection last year, large-cap PMs continue to underperform at an impressive clip.

What’s more, the underperformance results become even more apparent as the time horizon expands.

89% of fund managers underperformed the index over a 5-year time horizon.

86% over 10-years.

93% over 20-years.

The continued underperformance delivered by active managers illustrates three important takeaways for investors at home:

Performance: Outperforming the market is extremely difficult, even for professionals with significant resources at their disposal.

Fees: Active investment managers are not able to pick enough winners to justify their higher fee structure compared to passive investment structures.

Risk: Active funds often have higher Active Share by taking on different positions and/or different size exposures versus the benchmark, which often results in greater tracking error. In plain English, investors might not own what they intended to own.

**SPIVA stands for S&P Indices Versus Active

Sources: J.P. Morgan, S&P Dow Jones

That’s all for today.

Blake

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Private Credit feeling blue

Blake B. Millard — Wed, 04 Mar 2026 00:35:56 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

Private Credit feeling blue

Let’s dig in.

Blake

Markets in review

EQUITIES: Dow -0.83% | S&P 500 -0.94% | Nasdaq 100 -1.09% | Russell 2000 -1.79%

FIXED INCOME: Barclays Agg Bond -0.11% | High Yield -0.20% | 2yr UST 3.510% | 10yr UST 4.059%

COMMODITIES: Brent Crude +5.31% to $81.87/barrel. Gold -4.03% to $5,097.4/oz.

BITCOIN: -1.26% to $68,064

US DOLLAR INDEX: +0.70% to 99.07

CBOE TOTAL PUT/CALL RATIO: 0.94

VIX: +9.93% to 23.57

Quote of the day

“The stock market is never obvious. It is designed to fool most people, most of the time.”

- Jesse Livermore

Private Credit feeling blue

Concerns over Private Credit have been bubbling up to the surface for quite some time.

Since October, following the failures of First Brands and Tricolor, several concerns have emerged:

Software exposure: fears of over-exposure to software companies that are suddenly at risk to material disruption from AI

Problems with underlying credits: after an extended period of cheap money, select loans are not working out as originally intended

Liquidity: the recent troubles with Blue Owl Capital Corporation II (OBDC II) to deliver investors accelerated liquidity splashed across major media outlets and publications, further intensifying concerns

Technical failure: the failure of these Asset Management companies in January 2026 to better their July-September 2025 peak following the April low indicated a deterioration in momentum

Valuations: even with this corrective wave, these Asset Management companies still sport loft multiples

Private Credit was hot and now it’s not. That has some parts of the financial world on edge.

Last week, J.P. Morgan CEO Jamie Dimon piled on by warning of “dumb stuff” in the opaque private credit markets, drawing comparisons with the pre-GFC period.

Then Bloomberg reported that Boaz Weinstein of Saba Capital warned, “I think we are in the super-early innings of the wheels coming off the car.”

Even the Federal Reserve has expressed some concern about contagion in its latest minutes:

“A few participants commented that the financing of the AI-related infrastructure buildout in opaque private markets warranted monitoring.” Even more participants “highlighted vulnerabilities associated with the private credit sector and its provision of credit to riskier borrowers, including risks related to interconnection with other types of nonbank financial institutions such as insurance companies, and banks’ exposure to this sector.”

Simply put, credit worries are rising.

Hard to know the extent of the problem, but declining stock prices don’t exude confidence. Various Asset Management companies within the Financials subsector have taking a beating since mid-January.

These same concerns continue to show up in the prices of Business Development Companies (BDCs), as a representative ETF made another new low last week.

The converging trends of the AI boogeyman and the retail investing boom seem to be colliding at once and stressing a trillion-dollar-plus piece of the economy.

Since the Global Financial Crisis, Private Credit hasn’t really been tested by any kind of prolonged economic downturn.

And yet, barring some unexpected exogenous economic shock around the corner, I’m not seeing enough signs that a broader default cycle in Private Credit is looming imminently.

Financial conditions remain healthy, credit spreads are tight, and the U.S. consumer is resilient.

For now, this appears to be a case of rattled investors already jittery over an uncertain economy.

Sources: Ned Davis Research, Barron’s, Bloomberg, YCharts

That’s all for today.

Blake

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February: month in review

Blake B. Millard — Mon, 02 Mar 2026 22:54:11 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

February market bites

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +0.90% | Nasdaq 100 +0.13% | S&P 500 +0.04% | Dow -0.15%

FIXED INCOME: Barclays Agg Bond -0.40% | High Yield -0.06% | 2yr UST 3.477% | 10yr UST 4.038%

COMMODITIES: Brent Crude +7.22% to $78.13/barrel. Gold +1.98% to $5,351.8/oz.

BITCOIN: +5.39% to $69,404

US DOLLAR INDEX: +0.95% to 98.54

CBOE TOTAL PUT/CALL RATIO: 0.84

VIX: +7.96% to 21.44

Quote of the day

“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.”

- Ned Davis

February: month in review

February is a stark reminder to investors that markets don’t move in a straight line.

After January’s positive momentum carried major indices to new all-time highs, the mood shifted in the 2^nd month due to a landmark Supreme Court ruling on tariffs, concerns around artificial intelligence, softer labor market data, and major escalations in the Middle East. Meanwhile, international stocks and small caps continued to outperform, and bonds saw further gains, highlighting the importance of holding a balanced portfolio.

While headlines can create short-term volatility, the overall economy remains healthy and corporate earnings continue to expand.

Key Market and Economic Drivers in February

• The S&P 500 fell -0.9% and the Nasdaq 100 dropped -2.3% for the month. Meanwhile, the Dow Jones Industrial Average rose +0.2% for its 10th consecutive monthly gain

• The VIX, a measure of stock market volatility, increased to 19.9 at the end of the month due to AI-related concerns and trade policy uncertainty

• International Developed Markets (DM) jumped +4.5% in US dollar terms based on the MSCI EAFE Index, while Emerging Markets (EM) gained 5.4% based on the MSCI EM Index. Year-to-date, they have gained +9.9% and +14.6%, respectively.

• The 10-year Treasury yield ended the month lower at 3.95%. This is the first month it has fallen below 4% since last November.

• Gold closed lower at $5,279 per ounce but reached as low as $4,661 at the beginning of the month amidst significant precious metals volatility

• January inflation showed headline CPI at 2.4% YoY and core CPI at 2.5%

• The unemployment rate edged down to 4.3% in January, with 130,000 nonfarm payroll jobs added. However, annual benchmark revisions showed the economy created only 181,000 jobs in all of 2025, roughly 15,000 per month.

• On February 20, the Supreme Court ruled against the administration’s use of IEEPA-based reciprocal tariffs, prompting a pivot to alternative trade laws.

• On February 28, the U.S. and Israel launched military strikes against Iran, including the compound of Iran’s Supreme Leader who has been reported to be killed.

A Supreme Court ruling reshapes trade policy

The most significant policy development in February was the Supreme Court’s ruling on February 20th against the administration’s tariffs, which were originally enacted based on the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs against most trading partners.

Following the Supreme Court decision, the White House quickly adjusted tariffs based on another law, Section 122 of the Trade Act of 1974, which allows the President to impose tariffs of up to 15% for 150 days. These new import duties went into effect on February 24.

For investors, the key takeaway is that while the legal framework for tariffs has shifted, the policy direction has not. Trade uncertainty will continue to generate headlines and contribute to market volatility.

However, as history has shown, markets tend to adjust to new trade realities over time, especially as companies adapt their supply chains and pricing strategies.

AI disrupts tech trade

AI continued to dominate market conversations in February, but the narrative shifted from high valuations to a debate about the pace and degree of disruption on existing business models.

Some investors worry that AI agents could compress software margins, accelerate white-collar displacement through automation, and disrupt traditional business models faster than expected.

These concerns have contributed to a notable market rotation.

Investors have been diversifying away from mega-cap technology stocks and toward sectors perceived as harder to displace – including energy, materials, and industrials. This shift, sometimes described as a move toward “heavy assets, low obsolescence” (HALO) companies, helps explain why Tech underperformed while other parts of the market rallied.

Growth cooled while the labor market sent mixed signals

According to the Bureau of Economic Analysis, real GDP increased at an annual rate of 1.4% in the fourth quarter of 2025, down from 4.4% in the prior quarter and below market expectations of 2.5%. The slowdown was partly due to the record-long government shutdown and a deceleration in consumer spending. However, business investment grew 3.7% on an annualized basis, driven by record-setting investments in AI data centers. For all of 2025, real GDP grew 2.2%, which remains healthy by historical standards.

Perhaps more concerning is the state of the labor market. While the unemployment rate edged down to 4.3% in January, annual benchmark revisions from the Bureau of Labor Statistics (BLS) painted a much weaker picture – roughly 900,000 jobs that were thought to be added from April 2024 to March 2025 were revised out of the data. In reality, the economy created just 181,000 jobs in 2025, translating to ~15,000 additions per month.

This has led some economists to describe the current environment as one of “jobless growth,” a situation where the economy expands but job creation fails to keep pace. The divergence between GDP growth and employment has been widening since mid-2022, and it raises questions about the underlying quality and breadth of the current expansion.

International stocks, mid/small caps lead the way

One of the most notable developments in February was the continued outperformance of asset classes beyond U.S. large-cap growth stocks.

This broadening of market returns is significant for diversified investors. After several years where only a small number of large U.S. technology companies drove the majority of market gains, the shift toward international stocks, mid- and small-caps, and cyclical sectors suggests that investors are finding opportunities across a wider range of assets.

Within the S&P 500, roughly 2/3rds of index constituents are outperforming the index itself year-to-date, an indication of widespread participation not seen since the early 2000s.

U.S.-Israeli forces conduct joint military operations in Iran

Another significant geopolitical development is unfolding in real time as joint U.S.-Israeli military operations culminated in strikes across Iran and the death of Iran’s Supreme Leader Ayatollah Ali Khamenei.

This triggered widespread retaliation from Iran and counterstrikes across the region. Iran has launched missiles and drones at Israel and Gulf nations hosting U.S. bases, with civilian infrastructure in places like Dubai and Abu Dhabi also hit. Casualties are mounting on both sides.

The Strait of Hormuz, through which ~14 million barrels per day flowed in 2025 (about 1/3rd of global seaborne crude exports), is the main concern. Tanker traffic has virtually stopped as companies exercise caution, with vessels backing up and Iran’s Revolutionary Guards issuing passage warnings (no formal closure confirmed). Duration matters most – a brief halt is digestible, but sustained conflict could pressure global supplies heavily.

The big question now is whether tensions de-escalate or spiral. President Trump suggested the conflict could last weeks but also hinted at potential talks, while Iranian officials publicly rejected negotiations. Global reactions remain divided, with Western allies largely backing the U.S. and China and Russia condemning the strikes.

Bottom line?

While AI and trade policy uncertainty continue to generate headlines, the broadening of market leadership is a positive development for long-term investors.

Sources: Clearnomics, YCharts, Bloomberg, Ned Davis Research, Chartr

That’s all for today.

Blake

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Affordability blitz: the refund-driven fiscal impulse of 2026

Blake B. Millard — Thu, 26 Feb 2026 22:43:13 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

affordability takes center stage

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +0.52% | Dow +0.03% | S&P 500 -0.54% | Nasdaq 100 -1.16%

FIXED INCOME: Barclays Agg Bond +0.16% | High Yield -0.09% | 2yr UST 3.434% | 10yr UST 4.008%

COMMODITIES: Brent Crude +0.59% to $70.67/barrel. Gold -0.19% to $5,216.5/oz.

BITCOIN: -2.47% to $67,368

US DOLLAR INDEX: +0.07% to 97.76

CBOE TOTAL PUT/CALL RATIO: 0.85

VIX: +3.90% to 18.63

Quote of the day

“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

- Maya Angelou

Affordability takes center stage

Given poor consumer sentiment and fears around a “K-shaped” economy, the current administration has been laser focused on announcing new policies aimed at increasing affordability.

The blitz of proposals to improve affordability began mid-last year with the passage of the One Big Beautiful Bill Act and the promise of tax relief for American families.

Meanwhile, the start of 2026 has been marked by a series of policy announcements intended to improve affordability for U.S. consumers: 10% credit card interest rate cap, “Most Favored Nation” prescription drug pricing, housing market reforms, and many others.

Amidst all these changes, though, the earliest and most profound changes were the tax cuts for the consumer through the One Big Beautiful Bill Act.

While the tax cuts were implemented retroactively for 2025, tax withholding rates were not adjusted. Hence, this drives a higher-than-average tax refund this year.

January 26th marked the official start of the 2026 tax filing season.

Recently, the Treasury published a factsheet estimating a sharp increase in the average tax refunds for a significant share of families across the United States.

The Treasury has estimated that households will benefit from a $1,000 increase in their average tax refund this year, an approximate 31% increase in refunds, from the average refund last year ($3,230).

The rise in refunds is likely to offset higher consumer costs and decrease credit obligations/delinquencies to a more significant extent than traditional patterns, thus injecting a fiscal impulse across the economy in a meaningful way across 1H26.

Sources: U.S. Department of Treasury, Bloomberg, Goldman Sachs Global Investment Research

That’s all for today.

Blake

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Assembling the market’s jigsaw puzzle

Blake B. Millard — Tue, 24 Feb 2026 23:12:06 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

the market’s jigsaw puzzle

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +1.20% | Nasdaq 100 +1.09% | S&P 500 +0.77% | Dow +0.76%

FIXED INCOME: Barclays Agg Bond -0.01% | High Yield -0.07% | 2yr UST 3.465% | 10yr UST 4.035%

COMMODITIES: Brent Crude -0.11% to $71.41/barrel. Gold -0.91% to $5,178.2/oz.

BITCOIN: -0.05% to $63,898

US DOLLAR INDEX: +0.18% to 97.879

CBOE TOTAL PUT/CALL RATIO: 0.93

VIX: -6.95% to 19.55

Quote of the day

“I know I’m gonna get got, but I’m gonna get mine more than I get got though.”

- Marshawn Lynch, Seattle Seahawks

The market’s jigsaw puzzle

If markets are a jigsaw puzzle, as Goldman’s Tony Pasquariello wrote this morning, the U.S. equity market is one huge messy pile scattered across the table – pieces lack order, edges hard to find, the picture not yet obvious.

Technology stocks have been slammed particularly hard, with the Tech Sector SPRD $XLK down roughly 4% year-to-date and scores of individual stocks down 20% or more, as scrutiny around AI spending and disruption fears – particularly in software – have triggered aggressive de-risking.

In the last 3-4 weeks, Anthropic’s Claude Code releases have only amplified anxiety that AI may compress margins before it expands them.

As shown below, Claude single-handedly triggered several waves of market selloffs.

A few weeks back, whiz kid Matt Shumer broke the internet with “Something Big is Happening”.

In short, AI has reached an inflection point from possibility to reality and Matt argues that AI’s capabilities are greatly underappreciated by the wider public.

Then it was a viral blog post over the weekend from small research firm Citrini Research and its 33-year old founder that triggered a stock market meltdown on Monday.

The dystopian report described a hypothetical economic plunge in which mass white-collar layoffs create a deflationary cascade that pushes the unemployment rate above 10% while stock prices get wiped out. It goes on to describe the risk of “Ghost GDP,” which represents a scenario where AI drives massive productivity gains and corporate profits even as wage growth and employment weaken beneath the surface.

But, take a step back from this AI doom vortex and the broader canvas looks… fine?

The underlying fundamentals of the U.S. economy still remain more or less on solid footing.

Inflation continues to moderate, real economic growth (GDP) grew at a healthy 2.2% pace for all of 2025, and corporate earnings remain robust – all of which support valuations and long run growth. This in spite of some yellow flags that exist at the margin: labor market direction of travel, rising margin debt, and the upcoming changing of the guard at the Fed Chair in May.

The S&P 500 is flat on the year. The Dow is up ~2%. International markets up mid-single digits.

Under the surface, however, there has been real violence.

Software has endured its largest non-recessionary drawdown in three decades, with positioning collapsing to extreme lows and short interest surging.

As Michael Antonelli quipped: “There are whole swaths of investors who have no idea any of this happened to individual stocks.”

Capital has rotated aggressively into value, commodities, international stocks, and small caps – anything underowned and optically “cheap.”

JPMorgan argues that this rally is now roughly “85% complete,” with crowding near decade highs and the valuation gap between former Quality bellwethers and 2026 winners nearly erased.

As one example, Microsoft now trades at a multiple not meaningfully different from Exxon. That’s not a sign of tech excess. It’s a sign of rotation excess.

Importantly, Tech fundamentals haven’t cracked. Consensus still expects double-digit sales and earnings growth for software in 2026, margins remain healthy, and balance sheets are strong.

Where the market likely has this whole AI-doom narrative askew is AI will likely enhance many platforms, rather than replace them – particularly in cybersecurity and workflow automation.

And technically, the market hasn’t deteriorated either.

Major indices remain range-bound, with one of the narrowest starts to a year in over 40 years.

Equal-weight indices are still trending higher, while breadth indicators and measures like the NYSE Advance-Decline Line show widespread participation and strength.

So what’s really happening?

This is market rotation, period.

A positioning unwind in crowded trades, not a structural collapse.

A diversification impulse after a narrow leadership regime.

The puzzle is messy, but the picture isn’t broken.

Respect the volatility. Move light and tight. And, above all, stay on target.

Sources: Goldman Sachs Global Investment Research, Anthropic, Matt Shumer, Citrini Research, Michael Antonelli, J.P/ Morgan Markets

That’s all for today.

Blake

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The Supreme Court just struck down President Trump’s tariff policy. Now what?

Blake B. Millard — Mon, 23 Feb 2026 23:18:36 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

Supreme Court strikes down President Trump’s tariff policy

Let’s dig in.

Blake

Markets in review

EQUITIES: S&P 500 -1.04% | Nasdaq 100 -1.21% | Russell 2000 -1.61% | Dow -1.66%

FIXED INCOME: Barclays Agg Bond +0.20% | High Yield -0.16% | 2yr UST 3.440% | 10yr UST 4.031%

COMMODITIES: Brent Crude +5.45% to $71.44/barrel. Gold +3.27% to $5,247.1/oz.

BITCOIN: -4.87% to $64,898

US DOLLAR INDEX: -0.07% to 97.723

CBOE TOTAL PUT/CALL RATIO: 0.90

VIX: +10.06% to 21.01

Quote of the day

“If people weren’t wrong so often, we wouldn’t be so rich.”

- Charlie Munger

Supreme Court strikes down President Trump’s tariff policy

After nearly a year of trade policy uncertainty, the Supreme Court’s ruling last week that recent tariffs are unconstitutional has reset the policy landscape once again.

Yet, as is often the case in Washington, when one chapter closes, another opens. President Trump has already signaled a switch to an alternative legal framework for tariffs, and markets are still digesting what this means for trade policy, corporate earnings, consumer spending, and investment portfolios.

For investors, the most important takeaway is not the legal ruling itself, but what the past year shows about the importance of staying invested. While markets can experience swings during periods of policy uncertainty, they can also stabilize and recover when investors least expect it.

Tariffs will likely continue to drive headlines, so having a clear understanding of the events of the past year can help long-term investors maintain perspective as the next chapter unfolds.

A year of tariff volatility

To understand the implications for markets, it helps to understand what this ruling means.

Presidents have several legal tools available to impose tariffs, each with different rules around rates, duration, and scope.

The reciprocal tariffs announced on “Liberation Day” last April were justified under the International Emergency Economic Powers Act, commonly known as IEEPA. This law from 1977 grants the president broad authority to regulate commerce in response to a declared national emergency. In this case, the stated emergency was the country’s persistent trade deficits with many nations, illegal drug trafficking, and immigration.

Here is a short summary of the main events:

• On April 2, 2025, the initial announcement included a baseline 10% tariff on virtually all trading partners, with higher country-specific rates layered on top. The immediate market reaction was sharp, resulting in a correction across major indices.

• Then, on April 9, 2025, the administration announced a 90-day pause on the country-specific increases, leaving only the baseline rate in place. The markets began to rebound almost immediately, and rose to new all-time highs in just months. Trade deals were subsequently struck with individual countries and regions.

• On February 20, 2026, the Supreme Court ruled that the administration lacked the authority to impose sweeping global tariffs under IEEPA. The ruling reaffirmed Congress’s central role in setting trade policy.

Tariffs aren’t going away

The administration has prepared for this ruling, and it has already explored various other avenues to pursue tariffs without IEEPA.

So, following the Supreme Court ruling last week, the administration quickly implemented tariffs under a different statute, Section 122 of the Trade Act of 1974.

This law was chosen over other options because it can be used against a number of countries at once, and does not require long investigations and reports that could take months.

Specifically, Section 122 allows the president to impose tariffs of up to 15% for a period of 150 days, without requiring Congressional approval.

The spirit of this law was to allow presidents to respond to trade imbalances and threats without completely bypassing Congress. Historically, when the dollar was still backed by the gold standard, there were periods when this law was needed to protect the dollar.

This means that although some of the higher tariff rates introduced in 2025 may be rolled back, and the new tariffs may not last more than several months, tariffs are likely to remain an active policy tool.

There are other areas of uncertainty, including if and how refunds will be made. Courts must still determine whether businesses that paid tariffs under the IEEPA framework are entitled to refunds, and whether individual Americans would be included in any reimbursements. In the worst case, it could be years before there is clarity.

The economy does not always follow textbook theory

Economics is sometimes called the “dismal science” since it has a poor track record of predicting the response to major policy shocks.

When tariffs were raised to their highest levels since the Great Depression, many feared demand destruction, rising inflation, a strengthening dollar, and struggling markets.

Why did this not fully materialize?

1st, the level of tariffs changed quickly and repeatedly. The 90-day pause announced just one week after Liberation Day dramatically reduced the effective tariff burden on most trading partners. The highest announced rates never truly went into effect except with a few trading partners.

2nd, companies responded by stockpiling imported goods well ahead of the April deadlines. This was clearly visible in the trade data, which showed a significant spike in imports in the first quarter of 2025 as businesses front-loaded purchases.

3rd, and perhaps most importantly for markets, the underlying fundamentals of the economy remained solid. Inflation has continued to moderate, real economic growth (GDP) grew at a healthy 2.2% pace for all of 2025, and corporate earnings remain robust – all of which support valuations and long run growth.

Of course, this is not to say that tariffs had no impact. The federal government collected hundreds of billions of dollars in tariffs which were paid by both consumers and businesses.

But the experience of the past year is a reminder that economic outcomes are rarely as straightforward as the headlines suggest, and that is why it’s important investors do not react to worst-case scenarios.

Bottom line?

The clearest lesson from the past year is one that applies to virtually every other period of market and policy uncertainty: the best thing investors can do is stay invested.

Trying to predict the precise effect of tariffs on the economy and markets is not only difficult, but counterproductive to your goals.

Sources: Clearnomics, J.P. Morgan

That’s all for today.

Blake

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Revisiting February 19, 2020

Blake B. Millard — Thu, 19 Feb 2026 22:47:57 GMT

Welcome, Sandbox friends.

Today’s Daily discusses:

February 19, 2020

Let’s dig in.

Blake

Markets in review

EQUITIES: Russell 2000 +0.24% | S&P 500 -0.28% | Nasdaq 100 -0.41% | Dow -0.54%

FIXED INCOME: Barclays Agg Bond +0.02% | High Yield +0.04% | 2yr UST 3.466% | 10yr UST 4.073%

COMMODITIES: Brent Crude +6.10% to $71.88/barrel. Gold +0.16% to $5,017.2/oz.

BITCOIN: +1.41% to $67,022

US DOLLAR INDEX: +0.18% to 97.874

CBOE TOTAL PUT/CALL RATIO: 1.01

VIX: +3.11% to 20.23

Quote of the day

“The time your game is most vulnerable is when you’re ahead; never let up.”

- Rod Laver

It’s February 19, 2020

Imagine we’ve traveled back in time to February 2020.

A strange virus is spreading. The global world order is about to change. Lockdowns are coming. Millions of people will die. Nobody knows how long it will last or what it will break.

You mind your own business and have cash to put to work.

So you do the “responsible” thing. You invest a lump sum into the S&P 500 on February 19, 2020. Oh shoot, should I have dollar-cost averaged?

Oh well, too late.

Within weeks, you feel sick to your stomach.

From February 19 to March 23, the S&P 500 falls off a cliff, dropping -33.93% in just six weeks. Your fresh investment is instantly underwater. The headlines are terrifying. Your group chats are full of panic. Grandma is terrified. Every day feels like the start of a financial apocalypse.

This is an investor’s worst nightmare.

But there’s a twist: despite that gut-wrenching drawdown, the S&P 500 finished the year higher, up +16.26%. The market recovered faster than almost anyone believed possible, and then it never really looked back.

Fast forward to today – February 19, 2026 – and that hapless investor is now sitting on a gain of +102.6% in the S&P 500.

That advance comes in spite of a global pandemic, the supply chain bullwhip effect, a bear market, inflation hitting multi-decade highs, the fastest interest rate hiking cycle ever, a regional banking crisis, DeepSeek, a close encounter with nuclear war, election cycles, and dozens of other risks.

Time in the market beats timing the market, they say.

Most investors don’t fail because they picked the wrong investment. They fail because they quit at the wrong time. Or worse, they quite altogether.

They confuse volatility with danger. They treat temporary declines as permanent losses.

Looking back on 2020, a lump-sum investment felt reckless because it exposed you to immediate regret. Dollar-cost averaging would have felt safer because it spreads out the emotional pain. And yet, both strategies still work if you stay the course.

The real edge isn’t brilliance. It’s endurance.

Investing is a marathon, not a sprint. Financial goals and plans take time, and a few bumps and bruises (and perhaps a broken arm or two) will be incurred along the way.

With a bit of time and perspective, here are some takeaways that stuck with me from the incredible uncertainty investors faced during the covid-19 pandemic that persist across time, circumstance, and investor type:

Markets recover faster than your emotions do. Stated differently, the hardest part of investing is managing yourself.

Volatility is the price of admission for compounding.

The scariest moments often create the best long-term entry points.

Time in the market beats timing the market.

A suboptimal strategy you can live with is better than the optimal one you can’t. The plan only works if you stick with it.

The future is always uncertain. Volatility will test the deepest fibers in your body.

But, if you can stay the course, you give yourself the one advantage that actually matters: time.

Source: YCharts

That’s all for today.

Blake

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Connect with a Sandbox financial advisor – our team is here to support you every step of the way!