March Newsletter to Clients

Enjoy this month’s edition that features a review of stock market returns through February, a focus on international stocks and some helpful hints to avoid online scammers.

Note: I wrote this newsletter before the U.S. and Israel attacked Iran. Since then, the market has been anything but boring with both the stock and bond markets fluctuating dramatically. While no one knows where events will lead investment returns, we do have some market history for context. Jeffrey Yale Rubin, president of Birinyi Associates, an independent stock market research firm, examined the stock market response to “past U.S. attacks lasting more than one day.” Since Operation Desert Storm in 1991 there have been seven additional U.S. military campaigns of more than one day’s duration. Rubin’s research revealed that one year after the start of these wars, the S&P 500 rose 12.5%, on average. While the stock market has often been volatile after geopolitical shocks, sticking with the stock market has paid off over the long haul. 

Two months does not constitute a trend but, if I were to write a headline for the stock market through the end of February, 2026, it would be Boring is Back. Last year the so-called Magnificent Seven stocks drove the return of the S&P 500. Think Microsoft, Nvidia, Amazon, Meta, Apple, Alphabet and Tesla. These companies heavily invested in Artificial Intelligence and that was rewarded by investors last year, as they earned an average of 27.5%. Furthermore, they accounted for more than 25% of all S&P 500 earnings last year. 

This year? So far, concerns over AI and how it may disrupt companies’ business plans have caused the returns of the Magnificent Seven to lag the overall S&P 500. What kinds of companies are doing well? Value stocks – companies that have established businesses and pay regular dividends; Small-cap stocks contained in the Russell 2000 index; International companies. 

Here are the returns of the major indexes through February:

•    S&P 500 – 0.68%;
•    Russell 2000 – 6.20%;
•    MSCI EAFE index of international companies – 10.11%; 
•    U.S. Aggregate bond index – 1.75%.
Let’s look at international stocks a bit closer. Over the last decade and a half, U.S. stocks have dominated international stocks. Last year, that trend shifted with non-U.S. companies collectively returning over 32% compared to the S&P 500’s 17%. The trend has continued so far this year. There are some major reasons why we believe international stocks are an important part of most of our clients’ portfolios:

•    The U.S. now accounts for only about 26% of the global GDP, down from about 40% in 1960;
•    Global growth is more balanced with rising investment and productivity across Europe, Japan and emerging Asia;
•    International stocks trade at about a 30%-40% discount relative to U.S. stocks, one of the widest gaps in decades;
•    The value of the U.S. dollar fell 9.4% in 2025. This helps international companies when their overseas earnings are translated into U.S. dollar returns. 
Many of us own international stocks through T. Rowe Price Overseas Stock Fund (TROIX) that returned almost 32% in 2025 and is up over 9% so far this year. 
Schwab recently provided some good advice on how to spot – and stop – imposter scams. Here are four signs to watch for:

•    Too good to be true offers – unsolicited investment offers claiming guaranteed or unusually high returns are a bad sign;
•    High-pressure tactics such as messages or social media ads that demand your attention to “protect your account” are intended to press your panic button;
•    Contacts from out of the blue through social media, messaging apps or texts are often a good sign you’re being targeted by a fraudster;
•    Access and download requests – think twice if you receive requests to download software, share one-time passcodes or allow remote access to your device. 
What to do:
•    Stop. Don’t give out or confirm personal information – even if they already have it. Never send money, open new accounts or take any action without verifying what you are doing is legitimate;
•    Drop. Scammers can’t reach you if you disengage. Hang up the call, ignore the chat, swipe past the ad, or leave the group and then block the phone number so they can’t contact you again. 
As always, if you are concerned about a financial issue, please call us at 859-268-1117. 

Thank you for your continuing confidence.