| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
HORAN Wealth's Q1 2026 letter addresses significant market rotation driven by Middle East conflict and AI disruption. The Iran-centered conflict beginning February 28 has severely disrupted Strait of Hormuz shipping, causing oil prices to spike from $57 to $111 per barrel while triggering sector rotation into energy, semiconductors, and software. Meanwhile, AI tools are disrupting traditional software companies, with the tech-software ETF down over 30% since October. The Magnificent 7 stocks underperformed with a -12.16% decline, while equal-weighted S&P 500 gained marginally, indicating market broadening. Private credit faces headwinds from bankruptcies and redemption pressures, though systemic risks appear overstated. Despite the S&P 500's -4.6% Q1 decline feeling worse due to mega-cap weakness, earnings fundamentals remain strong with Q4 2025 results at 14.1% growth versus 10.8% expected. Looking ahead, Q1 2027 earnings are projected at 21.9% growth. Oil futures suggest conflict resolution expectations, and if geopolitical tensions ease, underlying economic strength including robust employment could drive favorable market conditions.
Despite geopolitical disruption and sector rotation away from technology stocks, underlying economic fundamentals remain strong with robust earnings growth and employment, positioning markets favorably if Middle East tensions resolve.
The manager sees many underlying economic positives including strong nonfarm payrolls, earnings exceeding expectations, and anticipated lower future oil prices. If there is a resolution to the Middle East crisis in the near future, the year ahead could remain favorable for investors.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 7 2026 | 2026 Q1 | IGV, MSFT, NVDA | AI, earnings, energy, geopolitics, Market Rotation, private credit, technology | - | Geopolitical conflict and AI disruption drove Q1 2026 rotation away from mega-cap tech despite strong earnings fundamentals. Middle East tensions spiked oil prices and disrupted shipping while AI tools challenged software companies. Though markets declined 4.6%, equal-weighted indices gained and earnings exceeded expectations. Resolution of geopolitical tensions could unlock favorable conditions given underlying economic strength. |
| Jan 14 2026 | 2025 Q4 | ACWX, EEM, EFA, GOOGL, META, NFLX, SPY | AI, consumer, Dollar, earnings, Fed policy, international, technology | - | AI dominance continues but international markets led 2025 performance, returning 33.7% versus S&P 500's 17.6%, aided by Dollar weakness. Strong earnings growth expectations of 15.6% for 2026 and dovish Fed policy support market broadening beyond Magnificent 7 into cyclical and value stocks, despite potential volatility from earnings disappointment risks. |
| Oct 14 2025 | 2025 Q3 | MSFT | AI, earnings, emerging markets, Federal Reserve, small caps, tariffs, technology | - | US markets rallied in Q3 on fiscal stimulus, lower tariffs, and Fed cuts. Technology and emerging markets led gains while earnings beat expectations. AI infrastructure buildout raises overcapacity concerns reminiscent of 2000 tech bubble. Labor market softening but corporate earnings remain strong. Rich valuations require continued earnings growth for further market advances. |
| Jul 20 2025 | 2025 Q2 | - | AI, Deficit, Dollar, earnings, international, Sentiment, tariffs, Trade Policy | - | Markets recovered from April lows in record time as tariff fears proved overblown and earnings exceeded expectations. The weakening dollar creates international opportunities while AI advancement drives optimism. Despite elevated sentiment and deficit concerns, economic resilience continues with strong corporate fundamentals and potential policy clarity supporting future capital investment. |
| Apr 14 2025 | 2025 Q1 | EFA, MAGS | diversification, Recession, Sentiment, tariffs, Trade Policy, volatility | - | Trump's tariff announcement triggered market volatility despite strong economic fundamentals, with international markets outperforming U.S. equities in Q1. Sentiment surveys show extreme bearishness while VIX reaches crisis levels. The firm views current uncertainty-driven volatility as temporary, advocating for diversified portfolios and using market weakness as opportunities to upgrade quality holdings. |
| Jan 7 2025 | 2024 Q4 | AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA | AI, earnings, inflation, large cap, rates, small caps, valuation | - | Market concentration in Magnificent 7 stocks created negative equity risk premium as megacaps trade at extreme valuations. Small caps offer better opportunity with reasonable valuations and accelerating earnings growth expected to outpace large caps in 2025. Fed policy turned cautious as inflation ticked higher, but supportive economic data should drive positive equity returns with broader participation needed. |
| Oct 22 2024 | 2024 Q3 | - | Bull Market, dividends, Fed policy, Participation, rates, small caps | - | US economic resilience drives broader market participation beyond Magnificent 7 stocks, with small caps and dividend strategies leading Q3 returns. Fed rate cuts support soft landing scenario while strong corporate earnings provide fundamental backing. Current bull market has recovered 152% of bear market losses but historical precedent suggests significant upside remains with 375% average recovery. |
| Jul 10 2024 | 2024 Q2 | AMZN, EBAY, LULU, META, MSFT, NKE, NVDA, ROST, SBUX, TGT, TJX, WEN, WMT | consumer, earnings, Economic Slowdown, Fed policy, Market Concentration, Sentiment | - | Market concentration reaches record levels with four mega-cap stocks driving half of S&P 500 gains while economic data shows slowing growth and consumer pressure. Despite mixed signals including rising unemployment and contracting PMIs, the firm expects improving corporate earnings and Fed rate cuts to provide positive market backdrop through 2025. |
| Apr 22 2024 | 2024 Q1 | AAPL, GOOGL, TSLA | earnings, Fed policy, market breadth, rates, Sentiment, technology | - | The S&P 500's back-to-back double-digit quarterly gains reflect strong earnings and economic fundamentals, with Q4 earnings growth reaching 10.1% versus 4.4% initial expectations. Fed rate cut expectations moderated as economic data exceeded projections. While favorable conditions support continued market strength, elevated sentiment suggests potential near-term corrections to digest recent advances. |
| Jan 13 2024 | 2023 Q4 | AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA | Bonds, Election Year, Fed policy, Magnificent Seven, small caps, Valuations | - | HORAN sees 2024 opportunities in small caps and bonds after 2023's Magnificent Seven-driven rally. They added small cap exposure in Q3 capturing Q4's rebound and increased bond allocations for higher yields. With small caps at historically low valuations and 17% earnings growth expected, market broadening beyond mega caps creates favorable risk/reward as the Fed approaches rate cuts. |
| Oct 20 2023 | 2023 Q3 | - | Bonds, consumer, earnings, Fed, inflation, rates, Utilities | - | HORAN Capital Advisors remains cautiously optimistic despite Q3 market weakness. The Fed's higher for longer rate policy has normalized yields after years of zero rates. Strong earnings momentum is expected to continue with 12.1% growth projected for 2024. The resilient American consumer supports economic stability despite elevated debt levels creating long-term fiscal concerns. |
| Jul 17 2023 | 2023 Q2 | - | - | - | |
| Apr 17 2023 | 2023 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
GeopoliticsMiddle East conflict centered around Iran began February 28 and continues, causing significant disruption to shipping through the Strait of Hormuz with daily ship transits declining from 130 to 6 per day. The conflict has created rotation into semiconductor, software, and energy sectors while impacting global commodity markets. |
Iran Strait of Hormuz Shipping Oil Conflict |
AIAI tools are disrupting traditional software companies by replicating results provided by some software firms, causing investors to rethink AI impact broadly. This has led to significant declines in software stocks with the iShares Expanded Tech-Software ETF down over 30% since October highs. |
Software SaaS Disruption Cloud Data Centers | |
Private CreditTwo notable bankruptcies in Q3 2025 highlighted vulnerabilities in the private credit loan market, with portions of capital structures financed through PCL. Recent redemption requests have exceeded expectations leading to withdrawal restrictions, though Goldman Sachs notes systemic risk fears are disconnected from actual data. |
PCL Bankruptcies Redemptions Gating Alternative Investment | |
EarningsS&P 500 Q4 2025 earnings came in at 14.1% growth, far better than the expected 10.8%. Looking ahead, Q1 2027 earnings are expected to be up 21.9%, which should serve as a tailwind for stocks if achieved. |
Growth Expectations Tailwind Corporate Results | |
OilOil prices spiked from $57/bbl at end of 2025 to $111/bbl due to Middle East conflict. However, oil futures traders anticipate the conflict is not a longer-term event, with the market expecting lower oil prices in the future based on futures spreads. |
WTI Futures Backwardation Conflict Energy | |
| 2025 Q4 |
HousingStructurally underbuilt housing with rising need as millennials form households. Higher mortgage rates reduce existing home supply as homeowners are locked into low-rate mortgages, benefiting new homebuilders and their suppliers. BLDR is positioned to benefit from this structural shortage. |
Homebuilders Building Materials Mortgage Rates Supply Shortage |
Metallurgical CoalSignificant underinvestment in metallurgical coal, a needed input for worldwide steel consumption, particularly in Asia and India where high-grade met coal resources are limited. Minimal worldwide met coal resource development over the last 10 years could lead to tight supply and higher pricing. |
Steel Production Coal Mining Asia Supply Constraints | |
EnergySignificant underinvestment in natural gas, oil and thermal coal which are necessary for the world's economies to function and grow. While renewables will play an increasing role, the change will occur over decades, not years. Offshore capital commitments expected to rebound in next 1-2 years. |
Oil Natural Gas Offshore Drilling Energy Investment | |
Regional BanksFlagstar has exceptional management ahead of the game in turning their business around, contrasting with other banks that are obfuscating issues and have unhealthy balance sheets. The turnaround is going well with first profitable quarter reported. |
Bank Turnaround Management Quality Balance Sheet | |
AIMany businesses are transforming to benefit from investor excitement with questionable business plans but intense stock promotion. While AI will have an impact, we are still very early in its lifecycle. Weak business fundamentals should become more apparent over time. |
Artificial Intelligence Speculation Business Models | |
Private CreditThe space has become very popular with lots of LP money chasing returns. Some sponsors have paid extremely high prices and lent on unfavorable terms. Many have also lent into the AI/data-center space to businesses with questionable futures. |
Private Lending Credit Risk Valuations | |
| 2025 Q3 |
AIAI remains a major investment focus with significant infrastructure buildout including data centers and power grid expansion. However, 95% of organizations are getting zero return from enterprise AI investments according to MIT study. Concerns about potential overcapacity similar to fiber optic overbuilding before 2000 tech bubble. |
Data Centers Infrastructure Computing Enterprise Overcapacity |
Trade PolicyInitial tariff rates from Liberation Day were revised down from 22% to 15.8% according to JPMorgan. Companies like Wal-Mart and Procter & Gamble are successfully passing along tariff impacts without volume declines. Manufacturing capital expenditure plans are recovering with more clarity around trade policy. |
Tariffs Manufacturing Onshoring Capital Expenditure Trade | |
EarningsQ2 earnings showed strong beats across most sectors despite initial downward revisions. Wall Street analysts are forecasting earnings growth to accelerate to 14.0% in 2026 compared to expected 10.8% this year. Corporate America remains in solid financial shape with healthy earnings growth. |
Growth Beats Forecasts Corporate Financial | |
RatesFederal Reserve resumed rate cutting cycle with 25 basis point cut in September, placing federal funds rate at 4.00-4.25%. Committee's median projection shows two more rate cuts in 2025. Decision driven by concern over potential downside risks to employment and moderating economic activity. |
Federal Reserve Cuts Employment Monetary Policy FOMC | |
| 2025 Q2 |
Trade PolicyThe letter extensively discusses tariffs and their economic impact, noting that many economists initially feared recession from Trump administration tariffs but recent analysis suggests the strategy may be to maintain tariffs while giving countries time to adjust and reduce non-tariff barriers. The approach could generate $400 billion in annual revenue while avoiding sustained inflation. |
Tariffs Trade Revenue Inflation Policy |
DollarThe U.S. dollar has weakened approximately 10% year-to-date due to mixed economic performance and concerns about prolonged budget deficits from the One Big Beautiful Bill Act. This weakening dollar is improving performance of international investments for U.S. investors as overseas assets rise when converted back to dollars. |
Currency International Weakness Deficits Performance | |
AIThe letter mentions that the potential of Artificial Intelligence advancement is providing excitement for future opportunities, contributing to positive market sentiment and corporate outlook. |
Technology Innovation Opportunities Growth Future | |
| 2025 Q1 |
Trade PolicyPresident Trump's tariff announcement on April 2nd surprised equity markets despite campaign promises. The tariffs focus on trade imbalances versus tariff imbalances, creating uncertainty around global economic impact and potential recession risk. The U.S. monthly trade deficit has increased to -$122.7 billion as of February 2025. |
Tariffs Trade Deficit China Recession Uncertainty |
VolatilityThe VIX has climbed to levels commensurate with COVID and the 2018 tariff period. Uncertainty tends to amplify volatility, with markets reacting less on fundamentals and more on panic-driven momentum. This volatile environment may allow investors opportunities to upgrade portfolio quality. |
VIX Fear Gauge Market Volatility Uncertainty Panic | |
| 2024 Q4 |
AIThe artificial intelligence theme was pervasive for most of 2024 and led to the formation of the Magnificent 7 stocks. These AI-driven companies accounted for just over 50% of the S&P 500 Index return in 2024. However, the slowing earnings growth is expected to be centered in the Magnificent 7 stocks while other stocks are anticipated to accelerate. |
Technology Magnificent 7 Earnings Growth |
Small CapsSmall company stock earnings are expected to grow by a significant amount in 2025 and far outpace earnings growth for mid cap and large cap stocks. Small company stock valuations are trading near their long-term valuation levels, unlike large cap stocks that are trading about 35% above their long-term average. Given that small company stocks have not kept pace with large cap stocks, they might hold up better in a market pullback. |
Valuation Earnings Growth Opportunity | |
RatesThe Fed reversed course and began reducing the Fed Funds Target rate in September with rate cuts totaling 100 basis points through December. However, longer term interest rates moved higher, with the 10-year Treasury yield increasing from 3.61% to 4.57%. The market now expects only one 25 basis point cut in 2025, down from an expected four cuts back in September. |
Fed Treasury Inflation Policy | |
InflationInflation has ticked higher in recent months with the Fed's preferred inflation measure, Personal Consumption Expenditures (PCE), increasing at a year-over-year rate of 2.94% after being below the Fed's preferred target of 2% at the start of 2024. This has led to more caution from the Federal Open Market Committee in deciding future rate cuts. |
PCE Fed Policy Rates | |
| 2024 Q3 |
Small CapsSmall cap stocks were one of the best performing asset classes in Q3, with the S&P 600 SmallCap Index leading returns. This broader participation beyond the Magnificent 7 stocks is viewed as healthy for the market and supportive of further equity gains. |
Small Cap Participation Outperformance |
DividendsDividend-focused strategies were among the top performing ETFs in Q3, with the S&P 500 Dividend Aristocrats Index up low double digits. This represents broader market participation away from just the Magnificent 7 stocks. |
Dividend Aristocrats Outperformance Participation | |
RatesThe Federal Reserve began a rate cutting cycle with a 50 basis point cut in September, lowering the upper bound to 5%. The Fed's dot plot projects rates at 3.4% by end of 2025, with expectations for additional 25 basis point cuts in November and December meetings. |
Fed Cuts Monetary Policy Soft Landing | |
| 2024 Q2 |
Trade DownConsumers are changing shopping habits due to elevated prices and higher unemployment, with higher earners now shopping at discount stores. Walmart is seeing increased higher income shoppers while companies like Starbucks and Nike face headwinds from consumer pressure. Sales growth for discount stores has outperformed name brands for several quarters. |
Consumer Discount Walmart Income Spending |
EarningsCorporate earnings growth is projected to improve with companies getting costs under control and pricing remaining sticky. Wall Street estimates show earnings growth accelerating to mid-teens later this year and continuing at that rate into 2025. Efficiency gains are leading to productivity growth and helping profit margins. |
Growth Margins Productivity Estimates Acceleration | |
| 2024 Q1 |
EarningsFourth quarter S&P 500 earnings growth expected to equal 10.1%, with companies performing better than the initial 4.4% expectation at year start. Near double-digit earnings growth is expected for all of 2024, providing a favorable backdrop for stock performance. |
Growth Expectations Performance Outlook |
RatesFederal Reserve expectations shifted from six rate cuts to three cuts in 2024, with some officials projecting only one cut. Higher oil prices, strong GDP growth, and elevated inflation contribute to Fed patience on rate reductions. |
Fed Cuts Policy Inflation Economy | |
| 2023 Q4 |
Small CapsThe firm began adding small company stock exposure to client portfolios in late Q3 2023, capturing the strong Q4 rebound. Small cap stocks trade at historically low relative valuations to large caps, with earnings growth expected to be up 17% in 2024 and 32% in 2025. |
Small Cap Valuations Earnings Growth Russell 2000 |
RatesThe Fed's eleven rate hikes from near zero to 5.5% by July 2023 was the fastest pace on record. The market expects the first rate cut at the March 2024 meeting, with Fed Funds anticipated at 4% by November 2024, though the firm believes this is aggressive given economic strength. |
Fed Funds Rate Cuts Monetary Policy Interest Rates | |
| 2023 Q3 |
RatesThe Fed's higher for longer stance has pushed the 10-Year Treasury to its highest yields since 2007. The firm views current rate levels as a return to normalcy after years of zero interest rate policies. Higher yields are creating competition for dividend-paying equities. |
Interest rates Fed policy Treasury yields Monetary policy Bond yields |
EarningsSecond quarter earnings showed strength due to subsiding input costs, with margin growth above the 20-year average. Third quarter earnings are expected to resume positive growth at 1.3% year-over-year, with 12.1% earnings growth projected for 2024. |
Earnings growth Margins Revenue growth Corporate profits Quarterly results | |
InflationThe Federal Reserve's interest rate policy is successfully bringing inflation down from 9.1% to 3.7%. Personal consumption expenditures remain at 3.5%, above the Fed's 2.0% target, driven by strong consumer demand. |
PCE Consumer prices Fed target Disinflation Price pressures | |
DividendsHigher yields on bonds and money market assets have created competition for yield-oriented equities. The S&P 500 Utility Sector is down 14.4% year-to-date, while dividend-paying stocks averaged negative 0.18% returns compared to 9.51% for non-dividend payers. |
Dividend stocks Yield competition Utilities Income investing Dividend yields |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| NVDA | At the beginning of November, NVIDIA and Microsoft accounted for over 14% of the index weighting. At the end of March, those two stocks represented just under 12% of the index. |
| MSFT | At the beginning of November, NVIDIA and Microsoft accounted for over 14% of the index weighting. At the end of March, those two stocks represented just under 12% of the index and Microsoft stock is down 31% from its October 31, 2025 high. |
| IGV | The market consequence is the software stocks have fallen with the iShares Expanded Tech-Software ETF (IGV) down over 30% since its high in October last year. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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