2026 First Quarter Commentary Report
Market Review
Global Market Performance
The first quarter of 2026 was a choppy one for global equities. Market appreciation in January and February was cut short by the start of the war in Iran the dramatic increase in the price of oil, increasing expected inflation. For US Stocks, the downturn was largely driven by the so-called “Magnificent 7”, a group of large-cap U.S. technology-driven companies that have dominated market performance in recent years. Large and small value stocks, however, buoyed portfolios with positive performance. International and Emerging Market equities ended the quarter slightly lower and real estate equities appreciated. Overall, our diversified equity portfolios with their value tilts performed relatively well, ending the quarter down slightly.
Market Returns (Q1 2026)
U.S. Stocks: -3.96% Russell 3000 Index
U.S. Large Value: +2.10% Russell 1000 Value Index
U.S Small Value: +4.96% Russell 2000 Value Index
International Developed Stocks: -0.94% MSCI World ex USA Index [net dividends]
Emerging Markets Stocks: -0.17% MSCI Emerging Markets Index [net dividends]
Global Real Estate Stocks: +0.77% S&P Global REIT Index [net dividends]
Bond Markets
Interest rates both home and abroad rose slightly along with inflation expectations. This puts downward pressure on bond prices. Although bonds ended the quarter down slightly, they offered solace in the stock market’s worst days.
Bond Returns (Q1 2026)
U.S. Bond Market: -0.05% Bloomberg US Aggregate Bond Index
Global Bonds (excluding the U.S.): -0.19% Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]
Planning Perspective
We have seen a recent increase in the number of people, specifically retirees, looking for advice on Roth Conversions. The popular press has been focusing on the so-called “tax bomb” created by required minimum distributions (RMDs) in retirement, and Roth conversions are often presented as the universal solution. A Roth conversion is simply moving money from a traditional IRA to a Roth IRA and paying the tax today in exchange for tax-free growth and withdrawals in the future. In the right circumstances, this can be a powerful planning tool, particularly if you expect higher tax rates later, have significant IRA balances that will drive large future RMDs, or want to leave tax-free assets to heirs. Conversions can also make sense in lower-income years, and when you have non-IRA funds available to cover the tax cost.
That said, the reality is more nuanced than the headlines suggest. Roth conversions are not always the right answer, and they can often do more harm than good. If you are already taking RMDs, the window for meaningful benefit is often narrower, as those distributions themselves cannot be converted and already create taxable income each year. Conversions may also be less compelling if you expect to be in a lower tax bracket later, need the IRA funds for living expenses, or would have to use retirement assets to pay the tax. Large conversions can push income into higher brackets and/or increase Medicare premiums. The right approach is highly individualized, often involving partial, multi-year conversions rather than a single large transaction. We are happy to analyze your specific situation, but the solution is not one-size-fits-all, and careful planning is essential to determine whether a conversion truly adds value.
Personal Perspective
Throughout the history of literature, an increase in elevation has been associated with an increase in perspective. Whether it’s the Oracle of Delphi, Moses hiking up Mount Sinai, or Wordsworth on Mount Snowdon, higher elevations have been seen as a source of wisdom or enlightenment. The recent Artemis II launch reminds us that when astronauts look back at earth from a distance, they feel a sense of euphoria and awe-inspiring interconnectedness. This is called the Overview Effect. When they view earth in a sea of never-ending darkness, with no signs of human civilization, our differences and biases fall away, becoming provincial and trivial.
In the investment world, we have a less formal saying, “when in doubt, zoom out.” This past quarter may have tested your psyche with negative news and volatility. But when you zoom out and look at a long-term chart of stock market performance, day to day, month to month, and even yearly ups and downs seem less important. What is important is broad diversification, an appropriate risk level, staying invested, and keeping your focus on what matters to you.
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.