Sarsi, LLC

First Quarter 2026 Market Newsletter

https://www.sarsillc.com/wp-content/uploads/2026/04/1Q-2026-Newsletter.pdf

EXECUTIVE SUMMARY

- Global optimism from late 2025 evolved into a more complex environment where resilient U.S. consumer spending and a stable labor market offset pressures from sticky inflation and geopolitical tensions.

- While global equities and bonds faced headwinds, investors found success by rotating into "out-of-favor" areas like Value and Small-Caps, which provided a critical buffer against the 12% drop in the "Magnificent 7."

- The U.S. economy continues to grow, though at a more fragmented pace, with high-migration regions in the Sun Belt and new industrial hubs significantly outperforming more stagnant coastal markets.

- Outside the U.S., economic conditions remain mixed; however certain countries are benefiting from appreciating commodity prices.

- A major highlight of the market's fundamental strength is that most of the 2025 equity returns were driven by robust earnings growth rather than just speculative hype.

- Corporate profitability remains a strong foundation, with 76% of S&P 500 companies beating expectations in the fourth quarter of 2025 and delivering the fifth consecutive quarter of double-digit earnings gains.

- Although valuations are facing increased scrutiny, forward-looking earnings and revenue forecasts for 2026 have recently been revised upward, which augurs well for future equity performance.

- The quarter reinforced the "fallacy of point-in-time returns," proving that a disciplined, diversified approach is the most reliable way to navigate shifting market tides.

- Historical shifts in S&P 500 leadership (such as AIG and Citigroup) remind us that diversification allows investors to capture the rising stars of "creative destruction" while avoiding over-exposure to yesterday's winners.

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Self‑Employed? The Right Financial Advisor Can Save You Thousands (Wall Street Journal)

Self‑employed ? The Right Financial Advisor Can Save You Thousands self‑employed ? The Right Financial Advisor Can Save You Thousands. Self‑employed people juggle cash flow, taxes and retirement. A financial advisor can help you save money and keep your business and personal finances aligned

What Elite Tax Pros Wish Their Wealthy Clients Knew. (Bloomberg)

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Tax Day 2026 is approaching. Are you ready for the OBBBA changes?

Increased SALT caps to restored 100% bonus depreciation things have shifted high for earners.

Read filing guide & checklist: https://www.sarsillc.com/prepare-for-the-2026-tax-season-filing/

Prepare For The 2026 Tax Season Filing Prepare for the 2026 Tax Season Filing with this guide from Deva Panambur, CFA®, CFP®. Learn how the OBBBA impacts SALT caps, depreciation, and IRAs.

http://www.sarsillc.com/wp-content/uploads/2026/01/4Q-2025-Newsletter.pdf

EXECUTIVE SUMMARY

- US stocks performed well in 2025, helped by large technology companies, though performance broadened modestly toward the end of the year.

- Foreign stocks outperformed US stocks significantly, helped by a declining dollar, corporate reforms and improved profitability in Japan as well as fiscal stimulus in Europe.

- Fixed income delivered a solid recovery after several challenging years, helped both by higher coupon income and declining interest rates as monetary policy gradually eased.

- The U.S. economy continued to expand in 2025, though at a slower pace than in prior years.

- The Federal Reserve cut its benchmark federal funds rate during the second half of the year.

- Political developments played a visible role in shaping market sentiment during 2025.

- Corporate earnings continued to be strong as companies navigated the uncertain and unstable environment.

- US stocks are more expensive than foreign stocks in absolute and relative terms.

- There are elements of investor behavior and market pricing currently that rhyme with previous bubbles but there are key differences that seem to suggest we are not yet in a bubble.

- Investors should continue to focus on diversification to create resilient portfolios.

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Should you rebalance your portfolios?

Should I Rebalance My Portfolios? Should I rebalance my portfolios?

Should I use a retirement account to pay off a HELOC (Mortgage)?

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Contrary to what you would think, the maximum income tax incurred on ordinary income is not 37% (The highest tax bracket) but a lot higher when certain 'tax torpedoes' such as reduced deductions are factored in. Comprehensive planning is important

EXECUTIVE SUMMARY

Read the full letter https://www.sarsillc.com/third-quarter-2025-market-newsletter/

- The third quarter of 2025 saw strong gains across all major equity categories, fueled by resilient corporate earnings, optimism surrounding Artificial Intelligence, trade deals and a Federal Reserve interest rate cut.

- The Federal Reserve cut interest rates by a quarter of a percentage point saying the economy was slowing and that risks to employment were increasing.

- Despite persistent concerns over inflation and economic contraction, the U.S. economy has several points of resilience that offer a silver lining. Consumer spending is healthy, and trade negotiations are advancing.

- The top 10 companies in the S&P 500 account for over 40% of the index’ market capitalization and a sizable portion of overall earnings and investments.

- The estimated earnings growth rate for the S&P 500 for the third quarter of 2025 is 8.0%. If expectations are met, it will be the ninth consecutive quarter of earnings growth for the index.

- The economic performance of non-U.S. countries has shown mixed results.

- Despite lower earnings growth and earnings quality, foreign stocks have had strong performance this year, helped by low relative valuation and a weakening US dollar.

- The key to navigating periods of potential turmoil lies in adopting a broad, long-term perspective. Maintain a sound financial plan tied to your specific goals and stick to it.

Market Newsletter Market Newsletter for the third quarter 2025

Should your polical view shape your asset allocation?

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With S&P 500 near record highs, it’s time to reconsider the set-it-and-forget-it strategy, some experts say.

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