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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Focus Wealth Management warns markets show late-stage bubble characteristics with half the S&P 500 at 10x price-to-sales requiring impossible returns. While AI is genuinely revolutionary, hyperscaler economics are unattractive and three-quarters of U.S. growth depends on this spending."
Focus Wealth Management's Q2 2026 letter warns that markets are experiencing late-stage exuberance comparable to 1999, with all traditional bubble indicators flashing red. While acknowledging AI as a genuine technological revolution driving the largest CapEx cycle in history, the manager is deeply concerned about valuations, noting half the S&P 500 trades at 10x price-to-sales requiring impossible assumptions for decent returns. The current $1.5 trillion technology investment boom already exceeds the Dot-Com peak, yet hyperscaler returns appear unattractive with CapEx growing 20% annually versus 15% revenue growth. Three-quarters of U.S. economic growth depends on AI spending, creating fragility. The manager is avoiding parabolic AI moves, instead focusing on high-quality businesses left behind by the mania, initiating positions in WSP Global and Abbott Laboratories while adding to Home Depot. The firm maintains dry powder for volatility, emphasizes shorter-duration fixed income, and advocates maintaining discipline when others abandon principles, as this moment of extreme complacency represents the greatest investment risk.
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