March 2026

Spring is here, and with it comes our quarterly check-in on the markets and the portfolio adjustments we're implementing. As always, my goal is to give you a clear picture of what's happening out there and explain the thinking behind the decisions we make, so you can feel informed and confident that your financial plan remains on solid footing.

Markets have had some turbulence to start the year, and I want to address that directly. The headline news can feel louder than the underlying data actually warrants. As you'll read below, the fundamental economic picture is still constructive, and the adjustments we've made are about where we are taking risk, and where we are reducing it.

As always, if you'd like to talk through your specific situation, please don't hesitate to reach out.

Yours truly,

Joel

ECONOMIC AND MARKET SUMMARY: MARCH 2026

The Big Picture: Fundamentals Remain Sound

Markets have been uneven to open 2026, and some of the headlines have understandably given investors pause. Geopolitical uncertainty (conflict in the Middle East), energy price fluctuations, and ongoing questions about trade policy have all contributed to a more volatile environment than we saw through much of 2025. When you look at the underlying data, though, the fundamentals still lean in a positive direction.

Economic data continues to show expansion, albeit at a slower pace. Growth remains resilient and labor productivity has been running at an above-average pace since mid-2023, an encouraging structural development. Inflation has trended in the right direction over the past couple of years, though we are aware that current oil prices could cause inflation to accelerate. 

The labor market, while showing some signs of moderation, continues to hold up. February showed a contraction of 92k jobs, however the unemployment rate remains at 4.4% which is below long-term trends. Taken together, these indicators reflect an economy that is still growing, even if the path forward carries more uncertainty than it did a year ago.

That context matters when we talk about portfolio positioning. The changes we are making this quarter are about being more thoughtful and selective in how we approach risk, given a market environment that is becoming more nuanced and less forgiving of concentrated positioning.

Equity Positioning: Getting More Selective

We remain constructive on stocks relative to bonds. What has evolved is how we are positioned within equities, and it is worth understanding the reasoning behind those adjustments.

Coming into this trade, the portfolio was positioned with notable overweights to U.S. large cap growth and emerging markets, both of which served us well over the past several quarters. With this rebalance, we trimmed those overweights, reducing concentration in the areas that have run the most while maintaining our overall equity positioning. The market has been shifting, and a more concentrated approach that worked well in a narrow, momentum-driven environment becomes less effective when markets begin to broaden out and volatility increases.

That broadening out is exactly what we're seeing. A year ago, a relatively small group of the largest technology and growth companies was responsible for most of the market's gains. Year to date, that dynamic has shifted notably. More companies across more sectors are contributing to returns, and the earnings gap between growth-oriented and value-oriented companies has narrowed considerably. Value-oriented earnings growth, which was minimal just two years ago, is now projected to be meaningfully stronger looking ahead, and that shift in the earnings picture is part of what makes broadening the portfolio's exposure sensible at this point. Our preference for quality and growth remains, and we are expressing it with more precision across a wider set of opportunities.

On the AI front specifically, our conviction remains strong. In a prior trade, we had already moved away from owning broad technology (software), shifting instead to a more targeted focus on semiconductor and AI infrastructure companies. That positioning has continued to serve the portfolio well this year (with higher volatility than previous years), as the divergence in performance between semiconductors and software has been significant. We continue to hold that more focused exposure, and are targeting both the companies building the core infrastructure that AI requires and those actively deploying AI to create genuine competitive advantages in their industries.

We also continue to hold exposure to global defense, a theme added to portfolios in late 2025 and expanded with this trade. Defense spending by both the U.S. and NATO allies has been on a sustained upward trajectory. One thing that has been interesting to watch is that global defense exposure has outpaced domestic defense significantly so far this year, as European allies have accelerated their own spending commitments. Having that broader, international lens within this theme has made a real difference in portfolio performance.

Within emerging markets, we are also being more selective at the country level. Given the volatility in oil prices and ongoing tensions in the Middle East, we are reducing exposure to countries that are heavily dependent on importing oil and increasing exposure to countries that are less vulnerable to that dynamic. This is an example of getting more precise within an asset class rather than simply moving in or out of it broadly.

Fixed Income: Upgrading Quality, Strengthening the Foundation

On the bond side of portfolios, the adjustments this quarter are about improving the quality of what we own and making sure the fixed income sleeve is doing its job: acting as a genuine counterweight to equities when markets get turbulent. The bond side of a portfolio is there primarily for stability and to behave differently than stocks when conditions get difficult, not to be a primary return driver. Rather than behaving like a lower-octane version of the same risk, we want it doing a different job entirely.

Credit spreads, the additional yield investors receive for owning corporate bonds instead of government bonds, are currently near their tightest levels in roughly two decades. When spreads are this compressed, bonds offer limited upside while carrying real downside risk if conditions shift. Historically, when spreads have started from levels this tight, returns over the following six to twelve months have been modest at best. We'd rather own more government bonds, which typically offer negative correlation to equities in volatile markets.

As a result, we've reduced exposure to higher-yielding corporate and emerging market bonds and shifted more of the fixed income sleeve toward higher-quality government bonds. This is a deliberate move to make the bond portion of portfolios more resilient and more useful as a portfolio stabilizer going forward.

On gold, which we added to portfolios in late 2024 and has been a strong contributor since, we trimmed our position modestly. After a strong run in price, taking some of those gains off the table is the disciplined thing to do, and we still maintain a position. Gold was initially added as a diversifier, partly in response to a trend we've been watching where central banks globally have been shifting their reserves away from the dollar and toward precious metals. That dynamic hasn't reversed, but after the appreciation we've seen, it made sense to scale back rather than simply let that position grow unchecked.

Looking Ahead

The adjustments made this quarter reflect a portfolio that remains tilted toward economic expansion. What we have done is further refined a portfolio that is more diversified, more selective, and positioned for a market that increasingly rewards broad exposure over concentration.

These are tactical adjustments. The long-term strategy, which is built around your specific goals, your timeline, and your individual financial picture, remains very much on track. Periods like this one are exactly what a well-constructed financial plan is designed to navigate. Staying the course, staying diversified, and trusting the process are what allow your unique long-term goals to stay within reach regardless of what markets do in any given quarter.

As always, these updates are meant to give you visibility into the thinking behind your portfolio. I am always happy to talk through any of it with you directly.

Certus Wealth Management