As we head into 2026, the Investment Committee and I wanted to share a quick update on the markets, our outlook for the year ahead, and a few portfolio adjustments we’ve made as part of our ongoing investment process and our annual rebalance. This process each year is a critical part of how we manage risk and what I’ve been doing for clients for going on 23 years now.

Markets had a strong year in 2025, helped by steady economic growth, easing inflation, and continued strength in large-cap stocks. Inflation continued to cool throughout the year, which gave the Federal Reserve more flexibility and opened the door to a more neutral policy stance.

Looking ahead, interest rate cuts are still expected at some point in 2026, but likely at a slower pace than originally thought. The economy has simply held up better than many expected. Consumer spending remains healthy, corporate balance sheets are strong, and larger, well-capitalized companies have generally outperformed. Smaller and more rate-sensitive businesses, on the other hand, have felt more pressure from higher borrowing costs.

As we move into 2026 and beyond, our focus remains the same: managing risk thoughtfully, positioning for long-term growth, and keeping portfolios aligned with your overall financial plan. Here’s what we are doing to achieve this vision:

• Rebalancing back to targets – After strong equity performance, we’ve completed routine rebalancing to keep portfolios aligned with long-term goals and asset allocation. This helps manage risk and prevents portfolios from drifting too far after strong market runs.
• Tweaking equity exposure – We’ve trimmed back slightly in areas that became more concentrated and reallocated toward high-quality companies with strong balance sheets, consistent cash flow, and pricing power. While leadership has been narrow, we believe opportunities should broaden over time.
• Refining managers and strategies – Our Investment Committee continues to review managers and strategies across all asset classes. In a few areas, we’ve made adjustments to improve diversification, reduce risk, and strengthen long-term return potential.
• Staying focused on quality – With some economic uncertainty still in the mix, we continue to emphasize quality in both stocks and bonds. Strong fundamentals and disciplined management remain key themes.
• Keeping portfolios diversified – Diversification continues to be one of the best tools for navigating uncertainty (yes, sounds boring and “old school”, but some things are timeless). While markets are never predictable in the short term, diversified portfolios are built to weather a wide range of outcomes.
• As the year unfolds, we’re keeping a close eye on the following: a gradually easing interest-rate environment, moderating but stable economic growth, broader market participation beyond a handful of dominant stocks (i.e. “the mag 7”), and ongoing opportunities in companies at the forefront of rapid innovation and change.

Short-term volatility is always possible, but we remain confident in the long-term outlook and, most importantly, in the discipline of our investment process. Every portfolio decision is made with your full financial picture in mind, not short-term headlines.

Remember what I’ve told clients for over two decades and multiple recessions and bull markets: “the way you make money in the market long term is by not losing too much in the bad years. We hit singles and doubles consistently and avoid swinging for the fences (that type of risk is/should be reserved for your “play money” or personal trading accounts where you keep a low % of your overall net worth).

As always, we’re grateful for the trust you place in us. If you have any questions or want to talk through how this outlook applies to your personal situation, please don’t hesitate to reach out.

This is not a replacement for the official customer account statements or trade confirmations from Raymond James or other custodians. Activity details including time and price will be included in the official statements and confirmations.  Investing involves risk and you may incur a profit or loss regardless of strategy selected. The process of rebalancing may carry tax implications. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Adams Wealth Partners and not necessarily those of Raymond James.