2026 Q1 Market Commentary

Q1 Commentary: A Lot Happened. Here’s What Mattered.

I am not a natural writer (I have good editors who help me look competent), which makes writing these quarterly commentaries difficult. Add in the fact that since the last commentary, you have heard from me four times, and I don’t really have much left to write. I almost wrote that I don’t have much left to say, but everyone in the office would laugh. I always have plenty to say. Some of what follows you may have seen before, but I think it is worth seeing again because this was an… interesting quarter, to say the least.

With everything that has transpired in Iran over the last month, you might not even remember that in the early morning of January 3^rd, United States Special Forces entered Venezuela to capture President Nicolás Maduro and his wife, Cilia Flores. This followed years of severe economic sanctions, a naval blockade on oil, and efforts to support opposition leaders, aimed at displacing the Maduro government. The mission accomplished its goals, and the United States moved to take control of Venezuela’s oil assets. What that means in practice remains to be seen. This was just a sign of things to come.

Less than two months after Venezuela, the Trump administration next turned its attention to Iran. The United States and Israel began bombing Iran. From the beginning, the bombing was intense and, according to reports, many leaders in the Iranian government have been killed. Additionally, the Trump administration reports that many hundreds of military sites throughout the country have been destroyed. Iran immediately responded by sending missiles and drones at Israel and at infrastructure in neighboring countries, Bahrain, Qatar, UAE, Kuwait, and Saudi Arabia. Iran then essentially closed the Strait of Hormuz, cutting off the route that controls 20% of the world’s oil supply.

Just when it looked like the conflict in Iran was spiraling out of control, both sides showed an interest in de-escalating the situation. As of this writing, a fragile cease-fire is holding as both sides work toward a more permanent end to the fighting. It appears the main sticking points are how long Iran must abandon their nuclear program and how much control it has over the Strait of Hormuz. If you want to read our thoughts on the conflict in more detail, here are the memos from earlier in the quarter.

As if this was not enough to disrupt the markets, between these two conflicts, we also had a market selloff based on AI fears. These were more industry and company-specific, but in some pockets of the market, they were severe. These selloffs originated when one of the major AI companies, Anthropic, issued an update that raised fears AI could be a threat to replace existing companies, primarily those in the software as a service space, but also some financial services and real estate companies.

With all this, and coming off three very strong years, one might think the market really struggled to start the year. While the S&P 500 pulled back by 4.6% in the first quarter, this is not bad considering all that occurred.[i] International stocks fared a little better, declining 1.2%.[ii] Small-Cap stocks and bonds eked out small gains.[iii] Investors who continued to try to ride the winner in the last few years, large-cap growth stocks, would have seen the largest pullback at close to 10%.[iv] What does all this mean? Ultimately, it was a quarter that rewarded investors who weren’t all in on one thing. Diversification is still important for delivering long-term results that help investors reach their goals.

Where do we go from here? Hard to say, as of this writing (mid-April), the second quarter is off to a scorching start for stocks due to optimism around a possible ceasefire in Iran. Going forward, there could be forces pulling the market in different directions. On one hand, first-quarter results for U.S.-based companies are expected to be great on the top and bottom lines (which should be positive for stocks), but U.S.-based stocks are at expensive levels against historical measures. Without getting too technical, stocks are trading at a forward P/E ratio[v] of around 30, which is well above the average of 18. However, as noted earlier, future earnings are expected to be good, making the future P/E of stocks only 25. That’s still historically high, but not by as much. On top of that, we will see a new Fed Chairman, which could mean… well, it is just too early to know what exactly that means. Likely incoming chair Kevin Warsh brings with him questions about potential interest rate changes and the Fed’s independence from political pressure.

With all this going on, we will continue to do what we have done in the past: stay patient, take advantage of opportunities to rebalance portfolios, and invest idle cash or raise cash depending on client-specific needs and what the market is doing.

Will

Disclosure: The views and opinions expressed are of Persium Advisors, LLC. This commentary is provided for educational purposes only and should not be construed as investment advice. Persium Advisors is an investment advisor firm located in Atlanta, GA.

[i] https://finance.yahoo.com/markets/stocks/articles/p-500-down-4-6-143500128.html

[ii] https://www.msci.com/documents/10199/822e3d18-16fb-4d23-9295-11bc9e07b8ba

[iii] https://www.morningstar.com/etfs/arcx/agg/performance

[iv] https://www.ishares.com/us/products/239706/ishares-russell-1000-growth-etf

[v]  PE Ratio – The price-to-earnings (P/E) ratio measures a company’s share price relative to its earnings per share (EPS).¹ Often called the price or earnings multiple, the P/E ratio helps assess the relative value of a company’s stock. It’s handy for comparing a company’s valuation against its historical performance, against other firms within its industry, or the overall market.