| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Aptus Capital Advisors maintains a constructive outlook on markets, viewing the current environment as a continuation of the bull market supported by three key pillars: fiscal policy, monetary policy, and private spending. The firm sees the AI narrative as a productive boom similar to the internet revolution, financed by profitable companies with strong balance sheets rather than speculative excess. While acknowledging near-term risks including potential AI slowdown, persistent inflation above Fed targets, and mid-term election volatility, the manager believes earnings growth will continue driving markets higher. The Fed's 0.75% rate cuts in 2025 and expected consumer tax cuts in 2026 provide substantial liquidity support. The firm recommends a balanced approach, owning more stocks at the asset allocation level while using hedges against concentration risk. With consumer spending remaining resilient and infrastructure investment providing GDP support, the manager sees potential for a Goldilocks period where both bonds and equities perform well, though returns may require more patience than the recent 22.94% annualized gains.
Bull market remains intact supported by massive liquidity from fiscal, monetary, and private spending, with AI representing a productive boom that should drive long-term productivity gains despite near-term volatility concerns.
Manager expects potential Goldilocks period with both bond and equity markets performing well, supported by continued liquidity, AI investment, and earnings growth. Believes burden of proof remains with bears as long as earnings grow and monetary/fiscal policy support markets. Anticipates market may act more like stairs than escalator going forward, requiring more patience.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 2 2026 | 2025 Q4 | - | AI, Bull Market, consumer spending, Fed policy, inflation, liquidity, Market Volatility | - | AI trade has lost some exuberance but represents a productive boom financed by profitable, cash-rich firms with strong fundamentals. Unlike past bubbles, current AI cycle is underpinned by robust demand and superior earnings growth. Manager believes best approach is owning more stocks at asset allocation level rather than picking individual winners. Massive liquidity being pumped into economy through fiscal policy, monetary policy, and private spending. Fed cut rates by 0.75% in 2025, fiscal exuberance continues at larger scales, and consumer-based tax cuts expected in first half of 2026. This liquidity supports both bond and equity markets in potential Goldilocks period. Government continues focus on fiscal spending to help both consumers and companies spur investments. Infrastructure spending and productivity could make serious recession unlikely. Investment spending represents remaining third of GDP that can support growth if consumer spending falters. Inflation persistently above Fed's 2% target with average rate of 3.6% since 1950. Manager emphasizes viewing inflation cumulatively over investment horizon rather than as annualized figure. Key question for 2026 is whether persistently high inflation will finally slow spending across income cohorts. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
InflationInflation has continued to be a persistent feature in Japan and has prompted changes in both corporate and consumer behavior. Importantly, inflation has fed through to corporate earnings and equity performance. Companies that have successfully passed on higher costs to consumers have benefited from improved operating margins. |
Inflation Corporate Earnings Operating Margins Consumer Behavior Cost Pass-through | |
Infrastructure SpendingPlaying on the continued theme of infrastructure spending, defense and energy sustainability, positions in Industrial and Energy sectors including Oshkosh, Coterra, OSI Systems, and Herc Holdings added positively to performance. |
Defense Energy Industrial Government Sustainability | |
LiquidityManager extensively discusses liquidity challenges in African frontier markets, explaining how tight ownership structures and limited foreign participation restrict trading volumes. Notes that liquidity varies cyclically and structurally, with potential improvement expected as bull market develops and more investor categories participate. |
Trading Volumes Participation Structural Cyclical |
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