| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | -4.35% | -4.35% |
Aptus advocates for skeptical optimism amid Q1 2026 market volatility driven by Iran conflict and AI disruption. The S&P 500 declined 4.35% as geopolitical tensions closed the Strait of Hormuz, spiking oil prices, while AI fears compressed technology valuations despite strong earnings. The manager emphasizes that markets historically recover from geopolitical events, with 79% positive returns one year later and median gains of 13.8%. Key fundamentals remain strong with the S&P 500 posting its 5th consecutive quarter of double-digit earnings growth and forward P/E falling to 19.7x, below the 5-year average. AI represents revolutionary change requiring new valuation frameworks rather than historical comparisons. Private credit faces redemption pressures but poses limited systemic risk given institutional ownership and healthy coverage ratios. The manager maintains conviction in owning risk assets, emphasizing that pessimism is expensive and long-term wealth creation requires accepting volatility. Focus remains on growth and profitability as core investment drivers.
Despite geopolitical volatility and AI-driven market disruption, investors should maintain exposure to risk assets given strong earnings growth, reasonable valuations, and historical market resilience to temporary shocks.
Manager maintains skeptical optimism, believing investors should continue owning risk assets despite geopolitical volatility. Focus remains on growth and profitability fundamentals with S&P 500 earnings expected to grow 17% in 2026. Current valuations are more palatable than a year ago with forward P/E below 5-year average.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 1 2026 | 2026 Q1 | - | AI, Geopolitical, oil, private credit, Resilience, technology, valuation | - | Aptus maintains conviction in risk assets despite Q1 volatility from Iran conflict and AI disruption. Strong earnings fundamentals with S&P 500 posting record 5th straight quarter of double-digit growth and attractive valuations below historical averages support the investment case. Markets historically recover from geopolitical shocks, making current weakness a buying opportunity for patient investors. |
| Jan 2 2026 | 2025 Q4 | - | AI, Bull Market, consumer spending, Fed policy, inflation, liquidity, Market Volatility | - | Aptus maintains bullish stance on continued bull market supported by massive liquidity from fiscal, monetary, and private spending. Views AI as productive boom with strong fundamentals, not speculative bubble. Recommends balanced allocation with more equity exposure while hedging concentration risk. Expects Goldilocks period ahead despite near-term volatility from elections and inflation concerns. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI is driving valuation compression as markets distinguish between AI winners and losers. Software stocks fell 24% in Q1 despite rising earnings expectations due to AI disintermediation fears. The technology is revolutionary, not evolutionary, fundamentally changing market composition and making historical benchmarks obsolete. |
Software Automation Productivity Valuation Technology |
Private CreditPrivate credit faces volatility laundering issues as public equivalents trade cheaper while private marks remain elevated. Redemption caps create theater fire scenarios, but systemic risk is limited given 90% institutional ownership and healthy coverage ratios. Default rates of 8-12% are manageable for the asset class. |
Shadow Banking Liquidity Marks Redemptions Institutional | |
GeopoliticalIran conflict and Strait of Hormuz closure created oil price spikes and market volatility. Historical data shows markets recover from geopolitical events with 79% positive returns one year later and median gains of 13.8%. Current tensions mirror past conflicts in their temporary market impact. |
Iran Oil Volatility Conflict Recovery | |
| 2025 Q4 |
AIManager views AI as a productive boom rather than a bubble, comparing it favorably to the dot-com era. While acknowledging potential air pockets, believes AI investment is financed by profitable companies with strong balance sheets, unlike past speculative bubbles. Recommends addressing AI exposure at asset allocation level rather than stock picking. |
Artificial Intelligence Technology Innovation Productivity |
Fiscal PolicyManager emphasizes fiscal policy as one of three key market drivers alongside monetary policy and private spending. Notes government fiscal exuberance has always been present and will likely continue at larger scales, mandating investors follow policy direction rather than fight it. |
Government Spending Policy Economic Growth | |
InflationManager notes inflation remains above Fed's 2% target with average of 3.6% since 1950. Emphasizes need to view inflation cumulatively over investment horizon rather than as annualized figure. Questions whether persistently high inflation will finally slow consumer spending across income cohorts. |
Consumer Prices Federal Reserve Purchasing Power | |
EarningsManager states earnings growth will continue to dictate market direction and should remain robust. Emphasizes that as long as earnings are growing and both monetary and fiscal policy support markets, the burden of proof remains with bears. |
Corporate Profits Growth Market Direction |
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