2026 Third Quarter Commentary Report
MARKET REVIEW: 3RD QUARTER, 2026
Global Market Performance
Global Equities had mixed performances in the third quarter but ended with modestly positive returns. Much of the volatility was due to the resumption of hostilities with Iran and the ensuing rise in oil prices. As you may have guessed, Energy stocks outperformed. Equities in more interest rate sensitive sectors such as Real Estate Investment Trusts and Utilities underperformed. Large Value stocks outperformed globally.
Market Returns
U.S. Stocks: +1.41% Russell 3000 Index
International Developed Stocks: +0.89% MSCI World ex USA Index [net dividends]
Emerging Markets Stocks: -0.37% MSCI Emerging Markets Index [net dividends]
Global Real Estate Stocks: -6.03% S&P Global REIT Index [net dividends]
Traditional index investments are market-cap weighted, meaning they automatically hold larger positions in companies simply because their stock prices have gone up, which currently leads to heavy concentration in a few massive tech names. Dimensional Fund Advisors, the fund company we prefer, takes a different approach by focusing on the broader market but intentionally leaning toward companies that are less expensive, smaller, and more profitable. We saw the true value of this discipline during the tech bubble of the early 2000s. The strategy lagged a bit during the speculative run-up, but it prevented outsized exposure to an overvalued tech sector and outperformed when the market fell. While no strategy can eliminate general market volatility, this specific type of diversification helps smooth out the ride, avoids the risk of over-concentration, and helps keep the long-term math of your retirement plan on track.
Bond Markets
Bonds generally posted negative returns as inflation expectations increased. In September, the Federal Reserve raised its benchmark interest rate for the first time since 2023. The 5 and 10-Year Treasuries rate topped 5%, which drives up borrowing costs for everything from mortgages to car loans. International Bond exposure helped to some degree.
Bond Returns
U.S. Bond Market: -3.51% Bloomberg US Aggregate Bond Index
Global Bonds (excluding the U.S.): -1.79% Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]
Longer term bonds will have more sensitivity to changes in interest rates. In general, we keep our bond portfolios relatively short-term. As our portfolios become more conservative, we shorten the maturity of our fixed income. For portfolios 70% stock or less, we target 10% of our bond side to ultrashort bonds, which posted positive returns this past quarter. This should roughly translate at least one year’s worth of planned withdrawals.
For further reading, we suggest Dimensional’s Approach to Asset Allocation and Quarterly Review: Cautious Investors Tap the Brakes.
PLANNING PERSPECTIVE: PLAN, DON'T PREDICT
David Booth, founder of Dimensional Fund Advisors, recently published Stay Calm, subtitled “Learn to Embrace Uncertainty in Investing and Life.” We ordered several copies and would be happy to send you one. The book traces Booth’s journey—from the University of Chicago and his work on the first index fund to founding his company in a Brooklyn brownstone. Having just finished it, I can attest that it is well worth reading. Its central message is that although we cannot predict the markets or what comes next in life, we can plan for a range of outcomes. “Plan, don’t predict” is the mantra. Booth also explores his idea of “True Wealth”: understanding how markets work, trusting human innovation, and remaining disciplined so we can focus our energy on what matters most.
PERSONAL PERSPECTIVE: EXPERIENCES ARE INVESTMENTS
Growing up, we had a family friend who had a house on an island in Maine. Spending time up there in the summers was a core experience of mine. The first time I went, we were so cold we had a fire…in June. We would spend our days hiking, exploring, and pick out our lobsters on the docks for $5 a pound. For a long time, I’ve wanted to take the family up there and this past summer we had the opportunity.
We generally think of travel as an expense. But really, our experiences, including travel, are investments in who we are. They compound, becoming more valuable over time. I know I’ll never forget watching the kids find wild blueberries along the side of the trail, develop their taste for lobster, or squirm when they felt the cold waters of Penobscot Bay for the first time. Their favorite and sometime heart-racing activity was climbing the rocks along the beaches. Would I trade that experience back for the funds invested? Not a chance.
Thank you for trusting us with your financial future. It’s a responsibility we take passionately. We’re especially honored when clients extend that trust by introducing us to family, friends, and colleagues. If you know someone who could benefit from the same care and guidance, we would appreciate the opportunity to be introduced. Your continued support means the world to us, and we’re truly thankful to have you as a client.
Myles B. Brandt, M.S., CFP®
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.
Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2026
S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2026, all rights reserved. Bloomberg data provided by Bloomberg.