The rally over the past few weeks has been remarkable as the market digests signs of de-escalation in the Iran conflict. Whether this leads to lasting peace remains to be seen; the situation is changing minute by minute. For now, at least, it appears the market has bought into optimism with one of the strongest V-shaped recoveries in history.

With all the headlines, we thought it would be helpful to share our thoughts on what this rapid rebound means and how we’ve been managing our client portfolios through it.

A Note on Fast Rallies

After sharp rallies, it’s natural to feel skeptical. The “easy come, easy go” instinct often makes people hesitant to embrace the positivity.  

We find the table below from Carson Research useful for providing context here. Strong short-term rallies—like the 10-trading-day surge we just saw—have historically been followed by positive 1-year results more than 80% of the time, with average returns almost double what they normally are. That doesn’t eliminate risk, but it does suggest these moves are often the beginning of something, not the end. It also reinforces how important it is to take a long term view when volatility hits, and why staying invested through the cycle is so crucial.

To us, this recent move feels like pent-up demand, much like what we see at the end of bear markets. Interestingly, the S&P 500 was only down around 9% at its worst point this year so far. That’s a sign that investor psychology remains quite sensitive to bad news but just as quick to embrace good news.  

This aligns well with our own view, which has been shifting more optimistic after a deliberately defensive start to the year.

Our Positioning Coming Into 2026

Entering the year, we remained constructive on the U.S. economy and the long-term power of transformative technologies like AI, blockchain, genomics, and more. We did not expect a recession, and so therefore believed it right to be optimistic on equities.  

That said, we took a cautious tactical stance because of high valuations and the extra volatility typical of midterm election years. So we began 2026 with:  

• Higher-than-normal cash levels  
• Lightened exposure in some of the big technology winners  
• Increases in strategically important sectors like oil and mining  
• New market-hedged strategies  

This positioning proved helpful during the recent uncertainty—even though we couldn’t have predicted the Iran conflict.

How Our Positioning Has Evolved

As the situation unfolded, we began deploying capital where we saw opportunity:  

• Added to high-quality companies whose stocks had fallen sharply (some down 30% from highs)
• Increased positions in cybersecurity names we felt were unfairly sold off in the AI-Software scare
• Took profits in companies that had run hard and reallocated to other areas with more room to grow  

We continue to respect the risks still present—potential geopolitical flare-ups, inflation pressures from oil, and uncertainty around a new Fed Chair. For that reason, we haven’t eliminated all our defenses. We still hold extra cash, meaningful oil and inflation hedges, and uncorrelated strategies that will hold up well in bad times. 

That said, our overall equity exposure has moved back to just above neutral. We are incrementally more optimistic, and our portfolios now reflect that balanced view. 

Our clients can expect us to continue navigating these waters with a mix of optimism and vigilance.