March 2026 Newsletter

March 3, 2026

Dear Valued Client:

“On Wall Street...”

As we transition into March, it feels as though spring is already here. Durango hit a high of 70 degrees on the first of the month, and the unseasonable warmth is slated to stick around. We are already seeing the trees, budding and flowers beginning to bloom. Also, a quick reminder; Daylight Savings Time begins this Sunday, so be sure to adjust your clocks to “spring” forward. Just as we prepare for these seasonal shifts at home, we are also closely monitoring the shifting tides within the various areas of the global financial picture.

The markets experienced a month of notable swings, which have been overshadowed by the ongoing conflict in the Middle East involving the United States, Israel, and Iran. This situation represents a significant geopolitical event that may fundamentally alter the future political landscape and oil story for some time to come. Reports continue to roll in suggesting an increased risk that the conflict will escalate, creating the potential for further disruption throughout the region. While such events naturally cause significant concern, our primary focus remains on the implications for your specific investment objectives here at home.

As in the cartoon, we expect the days ahead to be characterized by swings like yesterday, which started the day modestly down and ended the day up. Today began with the markets down a bit more and this afternoon it is trending back to where we started the day.

Historically, geopolitical shocks lead to short-term volatility, particularly within the energy sector. We anticipate that markets will react to the potential disruption of oil supplies through the Strait of Hormuz, coupled with reports of damage to regional infrastructure. However, it is important to consider the following points:

Energy Market Resilience: While a rise in oil prices is expected in the immediate term, global energy markets often possess mechanisms to mitigate long-term supply shocks. This includes production adjustments by other major oil-producing nations that have already announced supply increases.
Historical Context: Markets have historically demonstrated an ability to absorb impactful events over time. Initial reactions are often driven by uncertainty, which tend to stabilize as the full scope of the situation becomes clearer.
Strategic Stability: Our investment approach remains rooted in a disciplined, long-term strategy. Significant shifts in the global landscape are precisely why we maintain a diversified posture designed to withstand periods of heightened risk.

We continually assess market conditions as things remain fluid, to determine how these developments influence our near-term outlook. Please be assured that we are managing your assets with a high degree of caution. We are prepared to adjust as needed, while cautiously looking to capture opportunities where they arise. Uncertainty can also present opportunities for long-term decision making.

The total managed portfolio continues to show excellent results this year. Below is a summary of the performance, over one, five, and ten-year periods as of the market close on February 27, 2026:

So far in 2026, we are seeing a possible Sector Rotation. Equity markets have exhibited a unique and somewhat contradictory leadership pattern. After several years of significant dominance by the technology sector, there appears to be a shift toward cyclical sectors such as energy, materials, and industrials.

We are also observing a notable divergence between stock price performance and underlying earnings data. While the technology and software sectors continue to report the strongest earnings momentum, their stock prices have recently lagged. Conversely, sectors such as industrials have seen positive price growth despite negative revisions to their earnings estimates. This suggests that capital is rotating out of the technology sector that has been the growth engine over the past three years and into smaller, less dominant areas of the market.

This transition is largely driven by a more optimistic economic outlook, supported by fiscal stimulus and the delayed benefits of previous interest rate cuts. Simultaneously, defensive sectors like utilities and consumer staples are performing well. This strength in both growth-oriented and more recession-resistant investments suggests a market that is broadening its scope. Strong data from the labor market and American manufacturing suggests that the economy is still moving forward with healthy momentum.

Recent headlines regarding the private credit markets (think non-bank lenders), have highlighted a divergence between the stock prices of asset management firms and the actual performance of the underlying investment funds. For example, while the management companies of firms like Blue Owl Capital and Blackstone have experienced market volatility due to concerns over investor withdrawal limits and broader industry sentiment, the investment vehicles themselves continue to demonstrate resilience. Our portfolio holdings (Blue Owl fund, OBC and Blackstone Inc., BX) remain focused on senior secured loans and high-quality assets, frequently validating their recorded values through successful loan sales and maintaining their regular dividend distributions. It is important to note that these two private credit investments represent a modest allocation, generally comprising less than 3 percent of your total portfolio.

We remain confident that asset classes move through cycles, and we continue to monitor the long-term value of these positions. As we continue to evaluate the private credit landscape, we will make strategic adjustments as conditions warrant. We are also confident that your portfolio holdings in fixed income will continue to act as a stabilizing force. These holdings provide consistent income and act as a "shock-absorber" for your portfolio while we navigate the various shifting market environments.

We remain committed to our time-tested strategy of selective positioning and risk management through diversification. We are focused on identifying emerging opportunities for growth while protecting the progress we have already made together. If you have any questions about the stock market or your financial plans, please do not hesitate to reach out as we move forward.

Schwab has produced 1099 and 1099R forms for 2025. If you are enrolled in paperless delivery, please check your Schwab Alliance Dashboard to download your 1099s. If you elect paper delivery, you will receive your tax documents in the mail. Please note that corrected 1099s can still be released in the coming weeks. If you need assistance accessing your tax forms, please reach out to us at: (970) 403-1234.

Warmest Regards,

Intelligent Investment Management, LLP