In the words of Michael Jordan: “I’m back”. In all seriousness, I am happy to get back to writing these monthly blogs. This is my first musings piece since we launched Woodland Wealth Partners, and the feedback we have received has been positive and validating. Without further ado, below are my thoughts and some charts on the markets/economy.

For years, the Magnificent Seven stocks (Apple, Microsoft, Google, Tesla, NVIDIA, Amazon and Meta) led the market on the heels of their disruptive technologies and high growth at a large scale. 2026 has been a different story for these stocks as the Mag 7 is up only 4% YTD, trailing every major stock index. The charts below help explain why these names have underperformed:

The first chart from Bloomberg illustrates how the profitability of these hyperscalers is expected to decline this year and in 2027 due to their heavy investments in artificial intelligence. The second chart shows that these same companies are using almost all their excess profits to build out their artificial intelligence capabilities. The beneficiaries of all this spending are semiconductor companies such as Micron (+234% YTD), Applied Materials (+130% YTD) and Dell (+254% YTD). The semiconductor index now makes up nearly 20% of the S&P 500 index.

Investors are skittish about the return on investment from this massive spending spree. I have written before that the stock market hates uncertainty more than it dislikes bad news so until investors have a clear idea of what the payback of all this spend will be, these companies’ share prices will likely remain under pressure. In the end, I believe these companies have the scale and smarts to be successful in the A.I. race.

For years, there has been a clear bifurcation between the performance of the stock market and economy. These lines are becoming increasingly blurred as the percentage of household net worth of Americans in stocks is at an all-time high. The gap between the percentage net worth in equities vs. real estate is also growing.

Why is this occurring? Housing prices continue to rise and are crowding out many Americans from purchasing their first home. Technological disruption has made it easier and cheaper to invest in the stock market. Long gone are the days of trading commissions and opening an investment account can be done in minutes. The % of Americans invested in the stock market has been steadily increasing over the last decade and are near all-time highs. Movements in the stock market now carry more weight than ever and could provide more influence on consumer spending as more Americans feel the gyrations of the market than ever before.

2026 is expected to be a record year for the number of IPOs (initial public offerings) and deal values. According to Morgan Stanley, a mere $700B is expected to be raised by companies going public. We have already seen SpaceX go public and it is likely that OpenAI and Anthropic follow suit later this year. It is easier for companies to go public when the stock market is going up and financial conditions are healthy.

One of the more annoying idioms in our industry is when people say, “Had I bought Amazon when it went public, I would have made 250X my money.” What most investors don’t realize is how hard it is to hold individual stocks for decades and how volatile IPOs are early in their public life.

The chart above shows the median and average returns of thirty large IPOs over the past fourteen years. The median first-year drawdown was -54%. These were not fly-by-night companies; they were real businesses with revenue, and most were profitable or close to it. The drawdowns were severe because many were richly valued and still new to the public markets. Finding great companies is difficult; holding them for the long term is even harder.

Sports minute: I like what the Cleveland Browns did in the 2026 NFL Draft. They addressed the offensive line and wide receiver room deficiencies. My favorite pick was Toledo safety Emmanuel McNeil-Warren. As much as I love DE Myles Garrett, his timeline did not match up with the Browns, and they got a good return for him. I am impressed by the young players on the Cleveland Guardians, and they have weathered the injury bug well over the last month. They need to add a veteran hitter and bullpen arm because they are relying on too many rookies. Lastly, Cavs GM Koby Altman better have a good backup plan if LeBron James decides to not come back to Cleveland for his farewell tour.

Thanks for reading!

Raz