Thoughts from the Desk of the CIO
I’m grateful that I get to spend a significant amount of my time thinking about all things related to our Clients’ investments. When things feel like they’re going awry in markets, I have the distinct privilege of crafting calming messages to our Clients (to be fair, it’s always a team effort shared by our C3Os and our Media Team).
When we were writing to you this spring at the onset of the conflict in Iran, I messaged Dave and thanked him for trusting me with carrying the mantle that he carried for so long. He reiterated his trust in me and the team to continue to uphold the standard he had set with these communications, and in his message he also expressed something that continues to echo in my mind:
Even if this wasn’t my job, I’d still be dialed in
because “it’s just intrinsically interesting!”
With my inner nerd fully exposed, I wanted to focus this message on three topics:
- An overview of how markets have moved thus far in 2026;
- The SpaceX IPO, and;
- The ongoing diligence the Investments Committee is undertaking in managing the portfolio.
Market Overview
We’re six months into 2026, and there have been enough twists and turns in markets to fill a year (or two). The ongoing conflict in Iran, drama regarding interest rates (and a new Chair of the Fed), AI-related jitters, private credit concerns, and a hot inflation report this month have all made headlines and moved markets up and down.
Through it all, the stocks in the YeskeBuie portfolio have managed to appreciate by 15% year-to-date (and are up by more than 28% over the past year)*. The ride hasn’t always been smooth, but we remain grounded in the midst of motion that can feel frenetic and frenzied. That discipline gives the portfolio the opportunity to do what it does: harness the market’s momentum in service of our Clients’ goals.
The top performers thus far in 2026 are Emerging Markets [ex-China] (33%), US Small (25%), and US Small Value (19%). The worst performers to date are International Small (6%) and Small Value (7%), and the S&P500 fund we employ (8%)*. You know it’s been an especially strong start to the year when all the worst performers are on pace for double-digit annual returns. And, no, that’s not a prediction – we’ll see what the second half of the year holds!
Planning Space for Connection
Nothing captured financial news in June quite like the SpaceX IPO. Elon Musk is the world’s first trillionaire as a result of taking the company public. The stock enjoyed a meteoric rise (sorry) in its first week, peaking at just over $225/share. And it has since come back to Earth (the puns write themselves), trading at prices in the low $150s just two weeks after it became available for purchase (the pre-IPO price was $135, and it opened trading at $150). As of this writing, it’s trading around $170 and continuing to demonstrate a high degree of volatility.
What was fascinating for us were the contrasting perspectives we heard from our Clients leading up to and after the IPO. We heard from many of you – some wondering how to participate in the IPO, and others expressing concerns about the measures the company was taking to fast track its way into the major indices (it is currently trading on the NASDAQ, while the S&P500 has not compromised its standards in response to Musk’s overtures).
At the end of the day, the facts are thus: SpaceX lost billions of dollars last year and is not yet a profitable company; its current valuation of $2trillion is over 10,000% (112x) higher than its 2025 revenue (for reference, Nvidia’s is about 23x revenue); and there is simply no fundamental argument that substantiates its current stock price. That’s not to say that we’re predicting that SpaceX will fail. However, we’ve long held that any given individual company’s stock is too risky to hold in our Clients’ portfolios, and this instance is certainly no exception given the astronomical valuations (bad things come in threes, even jokes).
Portfolio Diligence
I often reference the ongoing diligence efforts of our Investments Committee (in addition to the five partners of the firm, Tim Connolly and Rustin McManis round out the group), but I want to spend a bit of time sharing more about our process in this space. Tim, Rustin, and I meet on most Fridays and discuss topics ranging from ongoing projects to research to ideas any one of us may be having that could affect decisions we make with the portfolio. As I’ve shared in the past, while final accountability and authority may lie with me, my approach is to use as much brainpower as is available to ensure we’re Thinking Big in service of our Clients’ objectives.
While we may not be making major changes to the portfolio on a constant basis, we are constantly evaluating the investments in the portfolio to ensure they still meet our standards. That evaluation process can take many shapes. Tim is responsible for sharing monthly performance reports with the team, identifying trends and sharing economic context to ensure our group is armed with the information they need to communicate confidently with our Clients. Rustin supports our initiatives with extensive research efforts and is also skilled in organizing information so we can digest it efficiently and make sound decisions in alignment with our values and philosophy.
We also meet regularly with our team at Dimensional Fund Advisors to get the latest on what they’re considering about as it relates to the construction of their funds, and we also lean on their team for analysis of our portfolio. Just this quarter, we’ve met with them twice to do a deep dive comparison of our portfolio of stocks against our peer group and the global market. We have a third meeting scheduled in early July to review our bond portfolio in the same manner. In continually engaging with our strategic partner, we maintain a robust relationship of support and ensure that our Clients’ assets are powered by the best available thinking.
While diligence can sometimes look tedious on the outside, we take pride in enjoying the fastidious nature of the work. And we do that work so we can be sure you’re getting the best of our thinking in your portfolio and so that we can remain prepared for whatever markets throw at us next.
At the end of the day, investing is about so much more than stocks and bonds, or dramatic headlines, or economic indicators. As you know, we believe the stock market and the economy are just representations of the aggregate decisions of all the people in the world, doing their best to allocate their time and money in ways that serve their best interests. How we relate to those systems informs everything we do, and we do so with a focus on our relationships with you.
Walking with you,
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