Going into the new year, the overall economic backdrop is favorable. However, consumer spending (the biggest contributor to the economy) is concentrated among high earners, which may explain why most households are not optimistic. Inflation is not going away. Employment remains stable, but new hiring is slow.
The stock market also started 2026 on a positive note.
Despite the tariff scare in April, the S&P 500 Index® (used as a measure for the U.S. stock market) finished 2025 up 18%. U.S. tariffs are now roughly half their April peak. This walk-back is partly responsible for the market’s comeback. But a small group of large technology companies drove the gains. These companies, along with others tied to the Artificial Intelligence theme remain overpriced. It may be difficult for company earnings to continue supporting these elevated prices.
With an expensive market, persistent inflation, midterm elections, an impending Supreme Court decision on tariffs, and a new Fed chair, we expect higher market gyrations this year. Rarely do we have a year without at least one market “correction” (a decline of at least 10%). This year could bring more than one.
And if corrections occur, the expensive tech stocks are likely to be hit hardest. In addition, any slowdown in the massive AI-related corporate spending would be felt disproportionately by these companies. This poses a real risk for investors heavily concentrated in these names. Reducing exposure to these stocks now would be wise.
We are already seeing other areas of the market going up – namely value, international, and small-cap stocks.
This broadening is a healthy sign, and these areas are where we have proactively shifted more exposure in our client portfolios.
Beyond strategic rebalancing, we build portfolios to balance each client’s need for short-term safety or current income while still managing investments focused on long-term growth. We closely watch economic data and market dynamics like these. Should there be a pullback in the tech names, we may see a buying opportunity, unless it’s triggered by a weakening economy.
Most individual investors don’t have the time, expertise, or appetite to manage this closely. Perhaps, like many people, you recently did a year-end review of your investments. Hopefully, with a strong 2025, you were pleased with the results. If you would like more peace of mind around your portfolio’s construction and ability to weather market dynamics, while still capturing long-term growth, we invite you to reach out. We will be happy to speak with you.
Many people put off estate planning because it feels uncomfortable or overwhelming. But avoiding the conversation doesn’t make the need go away; it simply makes things harder for the people you care about most.
A little preparation today can significantly ease the burden on your caregivers, financial agents, and estate administrators in the future. Clear legal documents and thoughtful conversations ensure your wishes are understood and respected, whether related to medical care, finances, or legacy planning.
One of the most important (and often overlooked) steps is having Generational Conversations™before decisions are needed. These conversations help families align expectations, reduce stress, and create clarity—making life smoother both now and down the road.
Start with these essential steps:
1. Prioritize Your Family’s Long-Term Needs
Think through and communicate your preferences for:
Housing and living arrangements
Care management
Financial decision-making
2. Create a Clear List of Assets
Document what you own and where to find it, including:
Bank and investment accounts
Property, titles, and deeds
Valuables and important keys or access details
3. Decide Who Gets What
Outline your beneficiaries and ensure your intentions are clearly documented.
4. Inform Your Decision-Makers
Make sure the right people understand their roles:
Executor
Healthcare agent
Financial agent
5. Gather and Protect Key Documents
Keep critical documents organized and accessible, including:
Wills
Healthcare directives
Powers of Attorney
Insurance policies
Financial statements
6. Ask for a Checklist
Integras Partners has created separate checklists for Retirees and Executors to make the process easier. We can also recommend secure, free online document vaults to store and share your information safely.
The Real Benefit: Peace of Mind
Planning isn’t about preparing for the worst—it’s about creating confidence, clarity, and peace of mind for yourself and the people who matter most.
“I wish I knew where all my money is going.” We hear this often when getting to know new clients. Sometimes people also aren’t sure how much they have, especially when they have multiple accounts in different places.
Like many anxieties, financial anxiety and stress can be caused by uncertainty. Focusing on things that you can control can help ease that anxiety. One easy way to start is by making a list of your accounts and balances, and tracking monthly spending. Once you know what you have and what you are spending, you can make conscious decisions with your money.
What comes in and what goes out
Consolidating investment and bank accounts helps form a clearer picture of what you have, what comes in, and what goes out. Some bank accounts offer teaser rates or cash bonuses to attract new deposits, but then the interest rates fall to almost zero. Consolidating bank accounts could mean that your savings would earn decent interest and be readily available when needed. Once you have a savings cushion, you can make investment decisions that grow your wealth. This can lead to greater freedom in making future life choices.
Growing Wealth might mean increasing your 401(k) contributions, starting a personal investment account, or even paying off car or credit card balances. Because loan rates are usually higher than bank interest, you’re ahead of the game by paying down debt.
A little organization goes a long way
Getting organized is one of the first steps in building a financial plan. A financial plan is the big picture, and helps you make financial decisions that are aligned to your goals.
Ask Us for a Checklist for more tips and to help stay organized. We have checklists for Young Professionals, Established Professionals, Planning for Retirement, Retirees and Executors.
Stock prices and corporate earning expectations have disconnected. Now, no price is too high to pay for access to this new AI playing field. The mega cap stocks primarily involved in the AI buildout trade at a Price to Earning (P/E) ratio of 35x. This means you’re paying for the next 35 years of expected earnings! The remaining stocks trade at a more reasonable 21x, yet investors’ appetite for risk has created a blinder to them. Investors seem focused on increasing future growth potential, and at any price.
Once something comes along to challenge the thesis behind all this spending on the buildout, and one of the large players pulls back, risk appetite will cease and these valuations will no longer be supported. Then we see how many billions of dollars have been wasted betting on A.I. and how many companies tied to that model will die. Once the music stops you don’t want to be left standing with high concentrations of these assets. Everyone playing musical chairs will look for a place to land. This is how manias end. No one knows when this will happen. But we know it ultimately will.
The good news is that markets are heading into their most resilient and consistent quarter for returns.
For almost the last 100 years, the S&P 500 has risen 74% of the time in the fourth quarter. Additionally, when the market is positive for the first nine months, it has increased 88% of the time. So, seasonality is on your side for the remainder of the year.
The resiliency of the US consumer is also a big positive. If employment numbers hold, consumers should be able to absorb the coming pass-thru of tariff costs. These higher prices also set the stage for a resurgence of inflation.
Speaking of tariffs (and the lack of inflation associated with them to date), companies have thus far absorbed most of the impact. Many front-loaded inventories trying to sidestep tariffs. Going forward as inventories need to be restocked, retail prices will go up. If the Federal Reserve continues lowering interest rates into an inflationary cycle, inflation numbers could climb in the coming quarters.
The bottom line is that we are in an A.I. driven asset bubble which may continue for a few more quarters, driving stock prices and associated risks up even further.
If the U.S. consumer is willing to pay more of the tariff costs that companies will be passing along, we will see inflation increase. The Fed may be forced to change course at some point with interest rate increases as opposed to decreases. The entire investment backdrop would then change, along with economic activity and economic growth.
There is still time and seasonality on our side before these issues may come to the surface, causing a reset of just how much risk investors tolerate. The sand is running out of the bottle while the music keeps playing. For now, keep listening while keeping an ever-present eye to anything that could be a threat to your well-being.
We are acutely aware of where markets stand and what is most likely ahead once the music stops. Significant investor losses often come from sitting still while frozen by what’s happening. If you would like some feedback and recommendations on your financial situation, contact us.
If you sell an investment property like a rental home or other piece of commercial real estate, you will owe taxes on the gain. Between capital gains tax and depreciation recapture, a taxpayer could pay more than 1/3 of their gain in taxes.
Many investors turn to DST programs to complete a tax-deferred exchange (known as a 1031 exchange). DST programs offer several advantages over finding individual replacement properties.
Some DST programs have an additional feature known as an UPREIT option. In these, an investor may have their DST interests subsequently acquired by a REIT on a tax-deferred basis, in exchange for Operating Partnership units (OP units).
This UPREIT option can provide additional benefits, such as:
Further diversification: A DST may own a handful of properties, while a REIT may own hundreds
Increased income: OP units often have a higher yield than DST interests
No need for future exchanges: An UPREIT transaction ends the ability to complete future 1031 exchanges, but maintains the investor’s tax-deferred status indefinitely (subject to some limitations).
Ability to control the timing of taxes: Deferred tax is not due until OP units are redeemed. An investor can choose if and when to request a redemption.
Liquidity for heirs: Heirs can choose to redeem OP units at stepped up basis. DST interests do not usually provide liquidity to heirs until the properties in the DST are sold.
The 1031 exchange rules are complex. It is advisable to speak with a tax professional and a financial advisor well before an investment property is sold.
